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Work from home? Your home office deductions MUST meet these four requirements

by , 23 April 2013
A growing number of South Africans run their businesses from the comfort of their homes. If you're one of these business owners, there's a way to claim deductions that'll put much-needed cash back into your business. But before you claim, read on to discover which four requirements your home office deductions must meet.

If you work from home, there's a perfectly legal way for you to take advantage of tax saving opportunities for your business by claiming home office deductions.

But, there's a catch.

You must qualify for the deductions and this means they must meet certain requirements.

This is important because SARS scrutinises these deductions closely. And the last thing you want is to be on the wrong side of SARS facing penalties for non-compliance.

Here are the four requirements your home office deductions must meet

According to The Practical Vat Loose Leaf Service, for home office expenses to constitute allowable deductions, the expenses must:

  1. Not be of a capital nature, like maintenance, rates, taxes and wear-and-tear on office equipment etc. qualify as a capital in nature.
  2. Be directly related and limited to the part of the house used for the purposes of trade;
  3. 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,' warns The Practical Vat Loose Leaf Service.
  4. If your trade is a form of employment, the income you receive, must be mainly 50% plus commission and your employer must provide you with an office to carry out your duties hence you work from home.

Keep in mind that 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 and this means they don't qualify for a home office deduction.

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