Will SARS allow me to claim home office allowances on this?
Our Tax Helpdesk service gets dozens of tax queries every week. Here's an interesting query we received recently, relating to home office deductions.
A few months ago I started a sole proprietorship paving driveways, parking bays, pavements, patio's, etc.
I rent a property which serves as my home and as my business premises. I calculated that I use 28.90% of the area of the property as my office and workshop. This includes storage and loading of paving materials, parking for my business truck, etc.
What's the maximum percentage of floor space or area will SARS allow me to use in my calculations for business use deductions?
The answer from our Tax Helpdesk
Here's what our Tax Helpdesk experts had to say…
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There's no maximum floor space that you can claim. SARS expects you to calculate the floor space you actually used and use that as the basis for the calculation.
In your case, SARS will only allow you to claim expenses which relate to 28.90% of the total area of the property.
But it's not just floor space you have to worry about when you're claiming home office deductions.
Home office deductions MUST also meet these 4 requirements or SARS will disallow them
For home office expenses to constitute allowable deductions, they must meet these requirements:
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NOT be of a capital nature (e.g. maintenance, rates and taxes and wear and tear on office equipment qualify);
Be directly related (and limited) to the part of house used for the purposes of trade (i.e. the office part only);
This part of the house must be used regularly and exclusively for the purposes of the trade. This means that setting a desk up in the corner of your dining room, and calling it your 'home office' during the day, won't cut it!
If your trade is a form of employment, the income, which you receive, must be mainly (i.e. 50% +) commission, and your employer doesn't provide you with an office to carry out your duties (hence, your home office).
Caution! Employees who don't earn commission, but spend most of their time on the road visiting clients are performing their duties mainly at their clients' premises. So they don't qualify for a deduction under Section 23(b).
For more information about home office deduction
s, get turn to chapter H02 in your Practical Tax Loose Leaf
In this chapter, you'll find out:
Who can claim home office deductions
Home office deductions for non-commission earners
How our graph can help you decide whether or not your home office expenses qualify for deduction.
Until next week,