Getting a tax break when working from home during lockdown

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Jamie McKane

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Getting a tax break when working from home during lockdown

Employees across South Africa have been working from home since President Cyril Ramaphosa declared a national state of disaster on 15 March 2020.

Working from home carries a few additional costs to employees, which include higher data use, telephone calls, stationery, and wear and tear on assets.
 
I'm surprised that it wasn't mentioned (and if I'm not mistaken?) if you do go down the route of claiming a portion of your home as office space then you will have ramifications in terms of tax when you dispose of the home.
 
Lol, so sorry for you if you live in a one room flat and have no choice but to convert a portion of your living room into an office type setup...
 
quovadis said:
I'm surprised that it wasn't mentioned (and if I'm not mistaken?) if you do go down the route of claiming a portion of your home as office space then you will have ramifications in terms of tax when you dispose of the home.
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you are entitled to claim all your expenses as deductions in regards to tax. All money your business spends in the pursuit of profit is expenditure.

If you run a business from home you are fully entitled to pay rent for the space you use. if the house is in your wife's name you can pay her rent. if it is in your name you can pay it to yourself. That is consider personal income thought so it has ramifications for your personal income tax, but you can do this for ages.

I don't consider this a tax deduction though. It is just having more expenses so as to have less profit to tax.
 
JurgensBeMe said:
you are entitled to claim all your expenses as deductions in regards to tax. All money your business spends in the pursuit of profit is expenditure.

If you run a business from home you are fully entitled to pay rent for the space you use. if the house is in your wife's name you can pay her rent. if it is in your name you can pay it to yourself. That is consider personal income thought so it has ramifications for your personal income tax, but you can do this for ages.

I don't consider this a tax deduction though. It is just having more expenses so as to have less profit to tax.
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I was referring more to the apportionment relating to capital gains if the property is disposed of?
 
According to SARS...

14. More than 50% of my home is used for business purposes. Do I qualify for the primary residence exclusion?
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No. Under the definition of a “primary residence” in paragraph 44 of the Eighth Schedule, a primary residence must be used mainly for domestic purposes. “Mainly” in this context means more than 50%
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I'm not sure what 50% of the house exactly refers to. if you have one room from which you work out of six does that become less than 50%

SOURCE
 
quovadis said:
I was referring more to the apportionment relating to capital gains if the property is disposed of?
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Mind explaining that a bit further?

If I use say 5% of my property to work from my R1m bonded home as a salaried employee, what sort of impact are we talking here. I have looked at this and didn't see any mention of a relation to CGT on a primary residence...
 
ToxicBunny said:
Mind explaining that a bit further?

If I use say 5% of my property to work from my R1m bonded home as a salaried employee, what sort of impact are we talking here. I have looked at this and didn't see any mention of a relation to CGT on a primary residence...
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That's precisely why I was asking in the hope someone would have some insight. My understanding is that if you purchased a home at 500k and sold it 30 years later for R5m and had utilised 'x'% for business use then there would be some form of CGT payable based on the apportionment and primary residence exemption wouldn't apply to the business portion. Obviously, CGT would have to be in excess of the threshold.
 
quovadis said:
That's precisely why I was asking in the hope someone would have some insight. My understanding is that if you purchased a home at 500k and sold it 30 years later for R5m and had utilised 'x'% for business use then there would be some form of CGT payable based on the apportionment and primary residence exemption wouldn't apply to the business portion. Obviously, CGT would have to be in excess of the threshold.
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Oh.. I thought you had the answer... solly...

It would be interesting to see what sort of impact it does have, if any. I just hadn't seen any reference to CGT when looking at ways to claim back some tax...
 
Unicus Tax Specialists said deductions for home office expenses may only be claimed by an employee on condition that:

  • The employee spends more than 50% of their working hours in their home office.
  • More than 50% of the employees’ remuneration consists of commission income;
  • The employee has identified a specific part of their residential home to use as a “home office”, and uses this part regularly and exclusively for work purposes.
  • The employee’s office needs to be furnished with specific equipment or tools that are specific to the employee’s trade or profession.
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Do all these conditions need to be met? #2 eliminates most of us I'd think?

I've got the rest covered.
 
Budza said:
Do all these conditions need to be met? #2 eliminates most of us I'd think?

I've got the rest covered.
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I reckon point 1, 3,4 have to be met.. not sure on point 2 as i've never seen that as a requirement. btw on point 3.. it has to be a room with that purpose as primary, so your dining room doesn't count wrt to the deduction.. basically measure the square meter area and divide by house total area and if paying rent you can easily work out the tax deduction. Internet.. can't claim for something you already had, similar to power.. so need to see what the additional usage is and then make the claim.
 
Agent_Smith said:
Lol, so sorry for you if you live in a one room flat and have no choice but to convert a portion of your living room into an office type setup...
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As always, tax punishes the poor and benefits the rich.
Rich people have extra room to setup a study / home office and claim rebate on taxes paid.
Poor can't afford the study / home office and so get no rebate.
 
Here's the TL;DR version:

"The chances of successful tax recovery for your home office costs is zilch!"

I stopped reading when I got the conditions. Irrespective of whether your personal costs have increased because you have been forced to work at home, the increased costs are null.

In our circumstances, it has been inferred that additional costs can be balanced against the saving of travelling into the office. While there may be some merit in this argument, the saving of no bums on chairs in the offices for some companies will be a tidy sum of happiness.
 
Yeah, pretty impractical for most people. I believe one feasible possibility, however, is for the company to decrease remuneration (less income tax) and pay for certain work at home related expenses directly in lieu of the reduction.
 
Goodluck, I have a full dedicated home office, trying to claim the tax is a hassle of note.
 
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