As the 2025 tax season draws near, South African employees working from home are being cautioned about the strict regulations governing home office deductions in the Income Tax Act, Cape Town Etc reports.
With a significant rise in remote work, experts urge salaried employees to familiarise themselves with the nuanced tax landscape that may affect their financial claims.
Tax consultant at Tax Consulting South Africa, Thokozile Kumalo, notes that the surge in remote working has prompted more employees to consult tax practitioners for clarity on these matters.
‘While home office deductions may appear straightforward at first glance, several specific provisions constrict these claims, especially for salaried employees,’ says Kumalo.
For salaried individuals who work from home full-time, there is a possibility of claiming home office expenses if certain stringent conditions are fulfilled.
Crucial sections of the Income Tax Act come into play when navigating these deductions:
- Section 11(a) – This is the general deduction formula, allowing taxpayers to deduct expenditures incurred in generating income, provided these expenses are not capital in nature.
- Section 23(b) – This section forbids deductions on expenses associated with premises used for domestic or private purposes unless a specific area is dedicated to employment, is equipped for such work, and is used exclusively for that purpose.
- Section 23(m) – This section places limitations on salaried employees’ ability to claim most deductions, creating a wall that many may find difficult to breach.
While Section 11(a) theoretically allows for deductions related to home office expenses, Kumalo points out the necessity of understanding its intersection with the limitations in Section 23.
For salaried employees, the criteria become noticeably tighter. For them to qualify for a deduction, more than 50% of their duties must be performed from the exclusive home office space.
However, the greatest hurdle arises from Section 23(m), which effectively blocks salaried employees from claiming most expenses unless they earn more than half their income through commission or variable remuneration.
This means that fixed-salary earners could find themselves unable to deduct typical business-related expenses such as internet costs or educational materials.
For those who can potentially qualify, here are some essential tips:
- Ensure your employer provides a formal letter confirming your remote work status.
- Maintain a dedicated and exclusive workspace within your home.
- Perform more than 50% of your work duties in that designated area.
- Limit your claims to direct premises-related expenses.
Despite meeting these conditions, Kumalo warns that the South African Revenue Service (SARS) may still challenge deductions beyond what Section 23(m) permits. Thus, it is imperative for taxpayers to substantiate their claims with thorough documentation.
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