Tax benefits for work from home employees

Tax benefits for work from home employees

Work from home and remote working has many benefits, some challenges too, but the good news is that SARS does offer tax benefits for work from home and remote working employees. 


As a freelancer and independent contractor working from home in South Africa, there are various income tax benefits that you can claim. In addition people who are employed on a fixed term contract or as a permanent employee, who work from home for all or part of the year can claim expenses from their income tax. The tax benefits include employees who work partly in office and partly at home in a more hybrid working manner. One would need to keep a log of the amount of time spent in the office versus at home in order to see if you qualify for the work-from-home tax savings. 


What work from home costs can be deducted from income tax?

Any cost related to operating your own business from home (even as a sole proprietor), or being able to work from home, should be tracked as it can reduce your annual income tax bill. Examples of these costs include telephone bills, internet costs, office equipment, stationery, cleaning, rent, bond interest, repair costs to your office premises and other expenses in connection to the wear and tear of your operating equipment and working space.

The work environment at home does need to be set up for work specifically. You cannot be working  from your dining room table or in a communal space in the home. 


How do I claim income tax back from SARS?

It is important to retain all invoices and slips for expenses incurred. The purpose of the paper trail is to be able to substantiate that the expenses claimed relate directly to working from home.  For hybrid office and home workers, it is a good idea to keep a running spreadsheet of days worked from home, and days at the office. Then collate your statements and relevant documentation to the days worked at home,  so that you have a complete record of all your work from home activities for tax purposes.


How does this affect permanent and fixed term contracting staff specifically?

Work-from-home solutions have become a mainstream phenomenon for many businesses affected by the Covid-19 pandemic.  It is welcome news that all employees are liable for tax deductions for home office expenditure, as long as they meet the requirements of ‘Section 11(a) as part of the South African Income Tax Act (58 of 1962). The Act serves as a clear guide to show where and how employees can deduct tax for expenses that relate to working from home. 

That is, provided that the employee has worked from home for at least six months of the tax year.

As remote working continues to cement itself into the norm of our everyday lives, it will be interesting to see how the Income tax Act evolves to reflect an ever growing population of home workers.

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