We live in the age of remote working and the trend is set to increase over the years. If you are wondering if there are any tax benefits that can be claimed if you work from home, the good news is that there are plenty.
Working from home is generally broken down into two categories:
- You work from home and are employed by a company, and
- You have a business where you work from home.
In the first category, there are two cases in which you are allowed to claim expenses, namely:
- You are allowed to work at least 50% of your time from home, or
- You earn at least 50% of your income from commission.
If the first of the above apply to you then you can claim home office expenses. While the expenses that you can claim for home office expenses are not as generous as those that a commission earner can claim, they are still enough to have a large financial impact on your financial affairs.
It is important to take note that you are required to have a bona fide office at home from which you exclusively work. You are then allowed to claim the following expenses relating to your household expenses, pro rata to the % square meters of the office in relation to the home:
- Insurance on contents and building,
- Interest on bond,
- Domestic worker,
- Wear and tear on private assets used for work such as tablets, cellphones, computers and books.
If you earn at least 50% of your income in the form of commission then you are allowed the same expenses as would be allowed for a business. Here are a few examples of expenses than can be claimed, many of which most people never know they can claim for:
The same expenses as home office expenses, plus
- Bank charges
- Insurance on vehicle
- Interest on vehicle finance agreements
- Entertainment (taking your client/staff out for a meal, etc)
- Advertising, etc.
The general rule of thumb is that if the expense is a bona fide expense incurred in the production of income, excluding a few exceptions, then the expense will be allowed as a deduction against your income.
Also, do not forget about Section 12 J investments that are fully deductible against your taxable income, as well as retirement fund contributions that are also tax deductible as long as you do not contribute more than R350 000 or 27,5% of your taxable income, which ever is the smallest.
I hope this advice helps to clarify what you can claim for, but as always, speak to a professional for advice to ensure you abide by the tax laws.
Frans van Eden, AGA (SA) is MD of Prioritse, specialising in tax planning, insurance, financial advice, accounting and corporate structuring.
If you are interested to find out just what exactly the financial impact could be for you, please feel free to book a complimentary online meeting with Frans van Eden by visiting this link: https://calendly.com/prioritise.
Prioritise is also offering free tax planning and submission of this year’s income tax return to anyone who uses the above link to book an online meeting with Frans, thus saving you a minimum of R950 for this year in addition to what you can be saving from SARS.