Flexible work arrangements have become increasingly popular as the needs of employers and employees change in response to the coronavirus (COVID-19) pandemic.
There is also financial pressure on employers to reduce overhead costs, such as office space—which is especially relevant since many employees are required to work from home in order to reduce the spread of COVID-19, and many employers have chosen to not return to their offices as advised by the government, wherever possible. This has created an opportunity for many employees who did not previously claim home office expenses as tax deductions, to do so for the 2021 tax year (1 March 2020 - 28 February 2021), in particular (and possibly going forward) if working arrangements move away from offices and more towards remote working.
The South African Revenue Service (SARS) allows certain individual taxpayers to deduct their home office expenses from their taxable income, provided that the requirements of the Income Tax Act No. 58 of 1962 are met.
Interpretation Note 28, Issue 2 (as issued by SARS in March 2011) provides additional guidance on the deductibility of home office expenses. The general rule is that the deductibility of expenses relating to a home office is determined with reference to section 11, paragraphs (a), (d) and (e), read together with sections 23(b) and 23(m). This means that for a home office expense to be deductible, the requirements of sections 11, 23(b) and 23(m) must all be met.
Read an August 2020 report [PDF 1 MB] prepared by the KPMG member firm in South Africa
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.