SARS urges taxpayers to carefully consider working from home expenses
The South African Revenue Service (SARS) has urged taxpayers to carefully consider working from home before submitting claims to the tax collector.
SARS recently posted an update on their website regarding home office expenses.
In a statement released Thursday, the collector provided additional clarification to individual taxpayers who may consider submitting home office expense claims on their tax returns which can now be filed for tax year 2021.
This is because many taxpayers started working from home as the country was feeling the effects of the COVID-19 pandemic.
Among other things, SARS said taxpayers should note that there had been no changes in the legislation regarding a “home office”.
“The legal requirements remain the same as before the COVID-19 pandemic. In short, this means that an office, suitably equipped, must have been fitted out at the place of main residence; the desk must have been used regularly and exclusively for work purposes. .
“The office must have been used for more than 50% of the employee’s duties or, if the employee earns more than 50% of his compensation from commissions or other variable payments based on job performance, more than 50% of his compensation. % of the employee’s duties must have been performed outside the employer’s office.
All home office expenses must be related to the use of the job and must be verifiable. Additionally, home office expenses should be deducted from source code 4028 in the tax return.
The collector said that when the home office is on property owned by taxpayers, taxpayers should note that the formal definition of part of a primary residence as a home office will most likely have a negative impact on a property. future determination of capital gains.
“The home office area will be pro-rated excluded from the R 2 million primary residence exclusion upon transfer of the residence. Therefore, special consideration should be given before making a claim for home office expenses.
“Taxpayers may also find that working from home has saved money on expenses that they would otherwise have incurred, such as transportation, wear and tear on vehicles, and so on. Combined with the loss of some of the capital gains exclusion, these savings may outweigh the benefit of a home office expense claim.
SARS said that while all home office expense claims may be subject to additional verification or audit by SARS, it is important to note that there is a high likelihood that a taxpayer claiming home office expenses for the first time either selected for audit or audit. .
SARS Commissioner Edward Kieswetter said: The need for many employees to work remotely has been made necessary by the COVID-19 pandemic in an unprecedented way. We understand that many employers and employees are grappling with establishing a new normal.
“We are simply asking taxpayers to carefully consider the longer term implications of defining an area of their primary residence as a home office for tax purposes. It may be more prudent to wait and establish a more sustainable pace before making the decision “.
This statement does not replace the actual text of the provision of the Income Tax Act, 1962, nor the guidelines on the SARS website. Taxpayers who need additional help can visit www.sars.gov.za.
(With contributions from the South African government press release)