The Home office and what you can claim

by with No Comment Home OfficeTaxTaxable

It is a new way of working, everybody wants to do it and the internet is making working from home a reality. We walk down the stairs and into our office. What a luxury. To do this we have set aside a small space in our house which we call our office. It is here that we do all our work, and earn our money. So what can we claim as a legitimate expense and how should we do this. Can I claim security; can I claim the gardener’s salary?

The receiver of revenue recognises that we have legitimate expenses and will allow reasonable claims. But this privilege has been abused. To avoid exploitation the receiver of revenue has published an interpretation note setting out what can and what cannot be claimed. Read it, it may save you some heartache and some money.

Disclaimer: please read the full interpretation note before making any decisions on a home office

So what is a home office

An area in your home that is specifically marked and equipped in such a manner that this area is used as a home office on a regular basis. Three important things:

1)      Specifically allocated. An area or closed space that looks like you could work there. The dining room table or the lounge couch is not good enough. I think the minimum should be an area that is enclosed and portioned off from the other area in your house.

2)      Equipped as an office. This are should have the tools of the trade available for use. So if you use a computer then there needs to be a computer. If you are a doctor then there needs to be an examination area and equipment.

3)      Regular basis. You need to use the office regularly. Stopping in occasionally to do some work does not qualify.

 

So what can I claim

You can claim all reasonable expenses related to running your home office:

Examples: Interest on your bond, maintenance, water and lights rates and taxes. download interpretation note for full list here

Download Home expenses spreadsheet here.

 

How much can I claim

This is easy. How big is your house (floor area) How big is your office (floor area). You can claim the expenses in the same ratio as the office is to the house. Example if the house is 100 square metres and the office is 10 square metres then you can claim 10 %

If in doubt please speak to a tax advisor for assistance.

Are My Employees Tips Taxable

by with No Comment EmployeesTaxableTips

In a special ruling released by SARS it was found that tips paid to employees through the payroll were not taxable.

Background:

  • The applicant customers used cash as their main form and payment and this was seen as a security risk. So much so that employees were not allowed to report for duty with cash on them unless this had been declared to management.
  • All tips received were declared by the employees and paid over to the company. This was to ensure the security of the staff. Staff found with undeclared tips could be disciplined.
  • The tips were recorded and paid into the employees bank account at month end with their salary payment

Special conditions

  • Tips do not form part of their conditions of employment or salary but are seen as reward by the clients for good service delivered.
  • The tips wewould not form of the remuneration calculation for the purpose of UIF or skills
  • The tips would not form part of the calculation for pension or medical benefit calculations

Should the employee leave all outstanding tips would be paid to him with his final salary

  • All tips would be paid out. No tips would be retained by the company

The tips should be paid out through your payroll system. Nothing was said about the tips being part of the IRP 5 certificate. I would keep a record just in case..

My other thought was about tips paid directly to employees ‘I am assuming that these are nontaxable as well.