Covid-19 got you working from home? Claiming from the taxman is not that simple

Due to the national lockdown since March, many employees, if they had been able to work at all, have been working from home.  

This has raised questions about what employees working remotely can claim from the South African Revenue Service (Sars).

Most industries were allowed to return to their workplaces from June 1. But some employees continue to work from home, fearing they could contract Covid-19 in the office, have underlying health issues putting them at additional risk or due to companies downsizing their operations as the economy takes a battering from the pandemic.

Rob Cooper, a tax expert at Sage, said costs that employees were incurring due to working from home should be reimbursed by the employer.

“That side does not affect the tax law. If the employee has to work from home, she uses data, a cellphone and stationery. These expenses should be covered by the employer,” he said.

For those employees working from home on a permanent basis, Cooper said there was provision in the Income Tax Act for them to claim from Sars if they had a designated space for working at home.

“That area must be used for working. It cannot be a kitchen table.”

Andre Kruger, director at law firm Fluxmans, said the fact that people have had to work from home had resulted in unexpected expenses being incurred — not in the production of their income, but for the benefit of their employer.

He said not all employers had compensated or reimbursed employees for these additional expenses incurred.

“Where employers have not reimbursed employees for expenses they have incurred in the performance of their employment, the Income Tax Act provides some relief in the form of deductions that an employee is entitled to claim against their income through the establishing and operating from what is colloquially called or referred to as a 'home office'.”

Kruger said normally an employee was not entitled to deduct expenses from his or her income to reduce the income tax payable.  

“However, under certain circumstances deductions are available. Unfortunately not all expenses are deductible and not every employee is entitled to claim the deductions.”

He said the deductions allowable for those who could claim include:

• rental or interest on a mortgage loan;
• cost of repairs to premises;
• telephones;
• internet connection;
• stationery;
• rates and taxes;
• cleaning;
• office equipment; and
• depreciation.

“In order for an employee to qualify for the deductions that are made available through the Income Tax Act, all the requirements need to be met.”

The employee has, firstly, to have actual expenses incurred in and related to his or her employment.

In order to claim the home office expenses, Kruger said the employee has to make use of a space in the home specifically dedicated to the performance and function of his or her employment.

“This area of the home is required to be specifically equipped for the purpose of the employment and must be regularly and exclusively used for the purpose of the employment.  

“If the area or room is not specifically equipped and dedicated for the purpose of employment or is only used occasionally, the employee will not qualify for the deduction.”

A further requirement is that the employee must be required to perform his or her duties for the employer mainly in that part of the private premises.

“In other words, the employee must perform more than 50% of his or her duties for the employer in that part of the home which is occupied and utilised for purposes of employment.”

Kruger said the other expenses that are incurred and relate directly to the employee's duties — such as Wi-Fi, telephone, computer repairs, office furniture and stationery — are fully deductible.

“The relief can only be realised with the submission of employee’s annual tax return,” he added. ​