The tax deductions accessible to South Africans working from residence

The tax deductions accessible to South Africans working from residence

As extra South Africans modify to the brand new regular of working from residence, questions come up round whether or not staff can declare tax, says Joon Chong, associate at legislation agency Webber Wentzel.

Chong famous that there are very restricted circumstances when salaried staff are capable of declare deductions for bills incurred in offering providers to an employer.

Journey bills from residence to the employer’s workplace usually are not claimable as deductions. Bills incurred in sustaining a house workplace are additionally not claimable besides in particular circumstances set out within the Revenue Tax Act, she stated.

​​”A person who runs a enterprise from residence as a sole-proprietor or impartial marketing consultant is often not restricted in claiming residence workplace bills proportionate to the world used for enterprise.

“Such people can declare hire, charges, curiosity on the bond, cleansing, repairs and put on and tear allowances on enterprise tools.​​”

​​Nevertheless, Chong stated that a person who earns remuneration from an employer can solely declare these residence workplace bills if:​​

  • Their residence workplace is provided for and frequently and solely utilized by the person to work for the employer for which they earn remuneration;
  • At the very least 50% of their remuneration is variable (comparable to commissions or bonuses) and no less than 50% of working hours are spent away from the employer’s workplace. If the person has lower than 50% of remuneration as variable funds, they’ll nonetheless declare residence workplace bills in the event that they spend greater than 50% of working hours working from residence.​​
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“The lockdown has demonstrated to people and their employers that distant working preparations can work efficiently. It could be extra environment friendly for a person to proceed working for 2 or three days of their residence workplace even after the lock down has eased.​​

​​”With the easing of lockdown, employers are requiring their staff to return to work for a restricted variety of days in per week on a shift or groups foundation to minimise potential Covid-19 publicity within the office,” Chong stated.

Which means salaried staff might spend greater than 50% of mixture working hours within the 2021 12 months of evaluation (12 months ending 28 February 2021) working of their residence workplace, she stated.

“If these staff intend claiming residence workplace bills of their ITR12 tax return for the 2021 12 months of evaluation, they need to retain invoices and statements of those bills, and put together a operating spreadsheet of the variety of days labored at residence for the tax 12 months,” the tax knowledgeable stated.

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“Any communication from the employer to do business from home throughout lockdown, or shift days after easing of lockdown would even be helpful to justify the variety of days labored on this spreadsheet. Repairs to the house workplace particularly can be allowed in full. Repairs to the constructing generally, nevertheless, should not be included in whole prices.”

Chong stated that these paperwork must be retained for 5 years and submitted to SARS ought to the ITR12 return be chosen for verification.

She added that the calculation of sq. metre of residence workplace space, relative to the whole residence, with the identical ratio utilized to bills comparable to charges and curiosity, additionally must be submitted.

Capital good points? 

​The flip facet of claiming residence workplace bills as deductions is that on promoting their houses, these staff would want to exclude any capital good points from the house workplace portion of the home from the first residence capital good points exclusion, stated Chong.

“This exclusion offers for capital good points of as much as R2 million on the disposal of a taxpayer’s major residence or all capital good points if the promoting value is lower than R2 million, to be disregarded,” she stated.

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​​Within the quick time period, Chong stated that it could be simpler for workers who must do business from home through the lockdown to say residence workplace bills from their employer on a reimbursive foundation with supporting invoices.

“Prices which may be claimed embody fibre connectivity, cellular phone, stationery, and laptop tools, if these have been incurred primarily within the employer’s enterprise.

“These quantities wouldn’t be a part of remuneration and no PAYE could be withheld from the reimbursed funds. Nevertheless, this technique requires extra involvement from the employer because of the have to test and approve the bills.”

Chong stated that if the worker is buying any asset on behalf of the employer to be used within the worker’s residence primarily for the employer’s enterprise, the employer can declare enter VAT on the reimbursements.

“It’s preferable for invoices to be within the employer’s title if potential. Nevertheless, if the worker is buying the asset as principal, then the employer wouldn’t be capable of declare VAT on the reimbursed quantities.”


Learn: South Africa wants to lift taxes to cope with its debt – these are the four areas SARS will deal with

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