Home Office Expenses

On 22 February 2023, the Minister of Finance announced in his Budget Speech for 2023, that National Treasury and SARS will be committed to a multi-year review of allowances which shall seek to explore the effect of remote working on the personal income tax regime.

It was announced that a discussion document shall be released during 2023 which shall outline workplace practices and policies, changes in the current environment and how different workplaces are affected by home office and travel allowance policies.

Currently the tax legislation around claiming home office expenditure is, in our view, narrow and restrictive and should be relaxed as more and more employees are required, and choose, to work remotely for various reasons.

In broad terms, currently a full-time salaried employee is not permitted a deduction in respect of home office expenses, unless the home office is specifically equipped for the purpose of the employee’s trade and is regularly and exclusively used for one of the following two purposes, namely:

  1. The employment income of the employee is mainly derived from commission of other variable payments which are based on work performance and the employee’s duties are mainly performed outside any office provided to the employee by the employer; or
  2. The duties of the employee are mainly performed in the home office.

These limitations do not apply to agents or representatives whose remuneration is normally derived in the form of commission based on sales turnover. However, many employees who earn a fixed salary are not able to meet these restrictive requirements and are thus unable to qualify for a home office deduction.

It is hoped that the outcome of this review will result in a less restrictive and more favorable dispensation regulating home office expenditure.

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