Working from home? Discover which expenses you can claim as tax deductions

IOL News

14 hours ago

More than 50% of the duties of employees working from home duties must be performed in the home office that is clearly defined and an exclusive workspace.
Image: Image: Unsplash
With the 2025 tax filing season looming, many South Africans working from home are asking what home office expenses they can claim as tax-deductible items and how to do it correctly.
This question is especially relevant for the growing number of South African employees working remotely for global companies who are increasingly turning to tax practitioners for guidance, says Thokozile Kumalo, Tax Consultant at Tax Consulting South Africa.
'While home office deductions may seem straightforward, the Income Tax Act includes specific provisions regulating these claims. Commission earners generally have more flexibility, but salaried employees working from home often face challenges because of the more restrictive rules applying to them,' Kumalo said.
According to Fine & Country Sub-Saharan Africa (SSA), what began as a temporary shift during the pandemic has evolved into a long-term lifestyle for millions, and the ripple effect was being felt across the real estate sector, where demand is growing for homes that seamlessly support this new way of living: flexible, tech-savvy, and lifestyle-enhancing.
'The future of work is hybrid, flexible, and mobile – and the homes we live in need to reflect that,' said John Herbst, the CEO of the luxury property for sale and expert service provider, earlier this year.
'We are seeing a clear shift in what buyers and renters are looking for – from built-in workspaces and tech to locations that offer not just beauty and tranquillity, but the infrastructure and services to support productive remote work,' Herbst said.
She said that if you earn only a fixed salary, work from home full time, and use a dedicated space solely for work, there may be grounds for claiming home office expenses, provided you meet the strict requirements set out in law.
The tax practice said the three key sections of the Income Tax Act that govern these deductions are: Section 11(a) – General deduction formula, Section 23(b) – Use of home for trade and Section 23(m) – Limitations for salaried employees.
It said Section 11(a), often referred to as the 'general deduction formula,' allows a taxpayer who is "carrying on a trade" to deduct 'expenditure and losses incurred in the production of income, provided such expenses are not of a capital nature.
In the context of a salaried employee, it said 'trade' includes employment.
'Therefore, an employee who earns remuneration is regarded as carrying on a trade in the form of employment. If a salaried employee incurs home office expenses in the production of employment income, those expenses will conceptually fall within the scope of Section 11(a).
"It is important when claiming home office expenditure that Section 11(a) is applied in conjunction with the limitations imposed by Section 23.'
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The tax consultant said Section 23(b) imposes a specific prohibition against claiming deductions for expenses related to premises used for "domestic or private" purposes.
She said there is, however, an exception where there is a dedicated area used for the purposes of employment, that area is specifically equipped for such employment and the area is regularly and exclusively used for employment.
For salaried employees (not commission earners), Kumalo said it is required that more than 50% of their duties must be performed in the home office and the home office must be a clearly defined and exclusive workspace.
She said for full-time remote workers with a defined, exclusive home office, this meant they may qualify-in theory. Many salaried employees meet the conditions under Section 11(a) and 23(b), which often raises hopes for a successful claim, Kumalo said.
She added that the biggest hurdle comes in Section 23(m), which disallows most deductions under Section 11 for employees who earn remuneration (i.e., salary) and do not earn more than 50% of that income as commission or variable-based remuneration.
Tax Consulting South Africa said that for taxpayers who earn a fixed salary only, Section 23(m) prohibits deductions for most expenditure, losses or allowances that would otherwise be allowable under Section 11(a).
It said only expenses directly tied to the use of the premises, such as rent, electricity, and cleaning, may be considered and only under very specific conditions.
In short, Kumalo said, while Section 11(a) allows the deduction of qualifying expenses, Section 23 (b) adds strict conditions for home office use, and Section 23(m) disallows most deductions for salaried earners.
'In practice, this means that even if the general and home-office-specific conditions are met, fixed-salary earners are still barred from deducting most business-related expenses, including internet and cell phone costs, accounting fees, and stationery.'
Sharing a professional tip, the consultant said if one is a fixed-salary earner working from home full-time and wish to claim deductions, they must ensure that their employer provides a formal letter confirming remote work, they have a dedicated, exclusive workspace, more than 50% of the duties are performed in that space and the claim is limited to premises-related expenses.
Even then, Kumalo said SARS may still challenge deductions beyond the narrow exemptions outlined above. She said that, therefore, the onus is on the taxpayer to prove that the deduction should be allowed.
The firm said that in preparation for the 2025 Tax Filing Season, taxpayers must be reminded that SARS applies the rules around home office deductions strictly and conservatively, particularly for salaried employees.
Taxpayers are advised to consult a qualified tax practitioner before submitting any home office-related claims to avoid audit risk, disputes, and potential penalties, it warned.
In May, Nomie Nxumalo, the executive head for people and transformation at Miway, said the integration of workspaces into personal residences brings about certain dynamics to home usage. She said many homeowners have invested in expensive office equipment, increased their reliance on home internet, and even started running businesses from their residences.
However, failing to inform insurers about these changes could lead to gaps in coverage or even rejected claims in some cases.
'Most standard home insurance covers are structured around personal use of the home. Whether you're running a business or working remotely, it's crucial to declare to your insurer if a portion of your home is being used for business purposes,' Nxumalo said.
'Not doing so could result in your claims being declined or certain losses not being covered.'
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