Many taxpayers and employers have been waiting for this notice. SARS have just released an updated Interpretation Notice, “IN 28 – Issue 3”, regarding the claiming of Home Office Expenses. Given the events of the past year, a vast number of employees were required to work from home, and as such, will be submitting a claim for certain expenses incurred whilst working from home when submitting tax returns this year.

As can be seen in the Interpretation Notice, claiming of these expenses is permitted, but there are some important items that one needs to consider before submitting a claim:

1. Although the employer has provided a letter to the employee confirming that the employer has requested the employee to work from home for a period (or indefinitely), the onus of proof that the employee actually worked from home remains with the employee. The employer cannot guarantee SARS that the employee actually worked from home – i.e. all they can guarantee is that the employee was not present at the employer’s workplace. It’s quite possible that the employee went and worked at a friend’s house because it was a more conducive or more suitable work environment. In this case, the employee would not be able to claim.
2. The section of the home used must be regularly and exclusively used for purposes of the trade. This means that even if one worked from home the actual area allocated must have regularly been used. Not regularly using the allocated area could disqualify the employee from claiming. Again the burden of proof remains with the employee. This could get interesting!
3. Regarding exclusivity – if the employee works on his/her laptop at the dining room table, this does not constitute an area “exclusively used”, as such they won’t qualify for the claiming of home office expenses. Also, if you do have a properly designated and equipped area – see example 3 contained in the notice regarding letting children play or watch TV in that area. You may need to put up a “Strictly No Entry” sign!
4. Sorry for those working couples who have been sent home to work. If you share the same home office then it’s not deemed as exclusively used and also if you both put your “tools of your trade” in that area, it’s not seen as being exclusively equipped. Couples may need to consider putting up some dry walling or a roof high screen in the home office in order to get around this! Imagine that discussion…
5. Then there is the concept of “mainly”. If the employee and his/her home office meet all the requirements, but much of the employees’ time during the “work from home” period was spent being out servicing clients, at the client’s premises, then that time spent at the client (i.e. out of the home office) must be compared to the total time that the employee should have been using the home office (i.e. to perform their duties), and if the time out at the client was more than the time in the home office then that employee may well find that they cannot claim any home office expenses, because they don’t meet the “mainly” criteria. Again, this is going to be a hard one for anyone to prove. Be careful – the Travel Logbook could be the “dead giveaway” when trying to convince SARS that work was “mainly” done at home.            
6. Finally – for those of us who wanted to make sure we could be as efficient at home, and installed a fibre line and connector to help get through all the work, unfortunately, we can’t claim any of these expenses. See 4.6.2 (b).

In summary, all is not yet final and perhaps things will change when the final version of this Interpretation Notice gets issued, otherwise there are going to be a few irate taxpayers out there!

As we always recommend with these often-complicated tax issues – get proper advice.

Read the full interpretation notice here.