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Has the sheen of working from home worn off yet?

Perhaps, but at least we get to claim a whole bunch of home office expenses when we file our tax returns with SARS and receive a tidy little sum back for our efforts.

In theory that should be the case. However, South Africans are finding out the hard way that SARS has done anything but make the process of claiming home expenses either easy or efficient.

According to one recent estimate by a tax consultant, as many as 85% of working from home tax deduction claims submitted by individual taxpayers are being rejected by SARS.

I’ve said it before and I’ll say it again – invest in the services of a tax expert who does more than just submit your documents and you might actually come out on top.

In addition, SARS is doing home visits to check that your working spaces are being used exclusively for work.

As Moneyweb point outs, despite the seismic shift in the way we work over the past 20 or so months legislation is still based on old ways of thinking:

Despite promises in the 2021 Budget Review that tax provisions for travel and working from home would be reconsidered in terms of their efficacy, equity in application, simplicity of use and certainty, nothing has changed.

The legislation is what it is. There are no new proposals, no new amendments. The most recent draft interpretation note issued by the South African Revenue Service (Sars) makes no concessions. It rubbed salt in the wound. It only “elaborated” and “clarified” the existing legislation.

Thanks, SARS.

This would all be more palatable if our taxes went to good use instead of being squandered. But I digress.

Back to the legislation which really is outdated:

The legislation does not account for the fact that people had to install fibre or some form of access to the internet, that they had to find space in their homes to use “exclusively” for the purpose of conducting their trade, and that they had to ensure the lights stayed on because Eskom is incapable of doing so.

Then there’s so the so-called exclusivity test which is a large part of why SARS is rejecting so many claims:

A family of four lives in a three-bedroomed house. Mom and dad share a room, the kids share the other room and the third room is used as a study. Then Covid-19 struck. Mom and dad were sent home to conduct their trade from home, which they did for most of the 2020/21 tax year.

They shared the study – each having their own desks and own computers. They will probably not be able to claim any of their expenses. Why? SARS makes no exception for shared spaces.

SARS requires that the “home office” you make use of when working must be “specifically equipped” for use by that particular taxpayer.

There’s no way of denying that is elitist. How many homes have sufficient rooms where parents working from home both have an exclusive space?

Navigating these claims also requires an understanding of various technicalities. Tax practitioner Charmaine Germishuys spoke with CapeTalk recently:

She says the reality during lockdown was that people were using a dining room table or sitting in the lounge or on their bed to conduct work – and that does not count for the requirements to claim back a study area.

“One of the things [SARS] could consider claiming is…a wear and tear allowance against the furniture you perhaps purchased… [so] you cannot claim for the lounge or bedroom as a work-study but you can claim wear and tear on that desk or chair you may have purchased to use for working from home.”

There are also many hoops to jump through in order to submit claims, including a letter from your employer permitting remote work, a floor plan showing the dedicated space, photos showing the dedicated space and how it is equipped, invoices, and various schedules calculating the time spent working from home.

All of a sudden that 85% rejection rate makes total sense.

Using renowned tax professionals like Galbraith | Rushby takes that headache off the table and also ensures that you’re giving yourself the best shot of having your tax deduction claims accepted.

Nobody wants a SARS home visit.

[sources:moneyweb&capetalk]