Turn Your Home Office Into a Tax Saver

Working from home: The best tax-deductible opportunities

The tax-deduction opportunities for offices at home have been severely restricted. But for smart people, there is still some elbowroom. You can deduct the costs of all office supplies, from pencils to wastebaskets and office furniture.

If you’ve set up a business and operate from home, the portion you use for business purposes is tax deductible. It’s also possible to rent a room from parents or siblings. This way the money stays in the family and the expenses are approved 100%.

Do you know these 7 deductible expenses?

You can deduct certain expenses related to your home office, but a number of things need to be considered from a tax point of view.

Section 23(b) provides a number of negative and positive tests you need to apply to your various expenses. Once you’ve determined that your expense is positive, and therefore deductible, you need to determine between direct and indirect expenses. You can claim all of your direct expenses, but only a portion of your indirect expenses.


These direct expenses are deductible:

1. Repairs and maintenance – in your office only!
2. Telephone, fax and internet
3. Furniture, wear and tear
4. Stationery
5. Equipment
6. Wages, e.g. secretary
7. Replacement of globes

The Practical Tax Loose Leaf  also shows you how to put cash back into your pocket by claiming the following:

• Legal expenses you incurred for any action, claim or dispute in the course of carrying on your employment
• Any donations you make to approved organisations
• Out of pocket medical expenses 
• Wear and tear on your assets that you use for business purposes 
• …and much more! 

What about wages to your domestic worker?

According to SARS, your domestic worker receives a salary for performing her duties in your complete household and therefore you can’t deduct her salary.
What we suggest: Deduct the wages you pay to your domestic worker for specific duties related to your home office e.g. cleaning your offices, answering your business calls and taking your messages.

Order your copy of the Practical Tax Loose Leaf 
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The income and capital gains consequences of effecting improvements to your home office are complex and often overlooked. Save yourself thousands by legally deducting the cost of improvements and applying the correct tax treatment.

Consider the situation where you run your CC’s business from home. You charge the close corporation a monthly rental for the use of a portion of your house as business premises. The business grows and to accommodate the expansion, you improve the office, by building on an extra room.

Is the cost of improvement deductible and by whom is it deductible? Is the improvement a taxable benefit to any of the parties? What are the capital gains tax consequences?

For example, you build an extra room on your house for R80 000 to be used as an office. In terms of the written lease agreement with your close corporation, it’s obligated to effect improvements to the premises to the value of R80 000. If the duration of the lease agreement is two years, the CC can deduct the cost of the leasehold improvements over two years i.e. R40 000 per annum. The CC will save R23 200 in tax on the deduction claimed over two years.

You will have to include the cost of the leasehold improvements in your income, but this will be mitigated by any loss that you may incur in letting the office to the close corporation.

Try our complete Tax Advisory Service risk-free for 14-days. As part of this service you’ll receive the Practical Tax Handbook, three Bonus Reports, Regular updates, the Weekly Tax Bulletin, Online access to past Tax Updates and a Tax Helpdesk.

What you’ll discover in the Practical Tax Loose Leaf:

• Office expenses: How to make as many things tax deductible as possible
• Hassle-free tax advice: From bookkeeping to the annual statement of accounts
• How you can deduct your cell-phone costs
• Expenses: How to obtain the approval of all entertainment expenses as business expenses
• Depreciation: How to achieve the highest possible tax savings with depreciation
• Corporate and Personal Tax: How to balance corporate and personal tax burdens in the most tax efficient way
• The 3 rules to apportioning your home office expenses
• In each update: The most important new judgments and administration decisions in brief and what they mean to you and your business
• How using your private assets for business purposes can put more cash in your pocket