Tax Season 2021

Tax Season 2021

Income Tax Filing Season for Individuals – Effective 1 July 2021
SARS have announced that the tax season for individuals in South Africa will officially open on 1 July 2021, and that it expects a significant number of taxpayers to be assessed automatically this year (“Auto-assessed”). Each taxpayer will need to log into SARS eFiling to either accept or edit their assessment. If they are not auto-assessed, they will need to complete their income tax return as usual and submit to SARS for Assessment. Taxpayers who are auto-assessed will be notified by SARS via SMS. 
Even though the auto-assessment process seems more convenient, taxpayers are advised to review their returns carefully to make sure all the information contained therein is accurate and complete.

Home Office Expenses

It has become common in recent times for employers to require or permit employees to work from home. The reasons for this include supporting flexibility, increasing productivity, health reasons, or as a cost-saving measure for employers to minimize working space and related costs. Such arrangements could be temporary in nature, or may have a degree of permanency. Persons in employment or persons holding an office may therefore wish to claim a deduction for certain expenses incurred in relation to a home office.
Employees who were not reimbursed by their employers for certain home office expenses while working from home, may now qualify for these deductions. To this end, SARS have issued draft Interpretation Note 28 for public comment by the 14th of June 2021.

The deductibility of expenses relating to a home office is determined by reference to section 11, read with section 23 of the Income Tax Act 58 of 1962. Section 11 provides examples of expenses which may qualify for deduction, while section 23 prohibits certain deductions. The burden of proving that an amount is deductible as a home office expense lies with the taxpayer.

Only expenses incurred directly in connection with a premises would qualify for a deduction. Examples of expenses provided by Interpretation Note 28 which may qualify as home office expenses:
  • Rent paid
  • Repairs and maintenance
  • Interest paid on a mortgage bond
  • Municipal charges such as rates and taxes, electricity and sewerage
  • Levies paid
  • Cleaning costs
In order to claim these expenses as a home office deduction, the taxpayer will have to prove to SARS that:
  1.  The workspace is a dedicated workspace, specifically equipped for the purpose of employment and is regularly and exclusively used by the taxpayer for work purposes.
  2. Their duties are performed more than 50% of the time at the home office

2.1 This burden of proof will only lie with taxpayers who do not earn more than 50% commission-based income.

Expenditure relating to rent of, cost of repairs of, and expenses in connection with, the premises, is required to be apportioned based on the floor area of the home office in relation to the rest of the premises.

Capital Gains Tax Implications

It should further be noted that taxpayers who wish to claim expenses as a home office deduction will lose a portion of their Primary Residence capital gains tax exclusion (Currently R2mill) when the residence is sold.

Deadline for submission

Taxpayers will have until the 23rd of November 2021 to file their 2021 Income Tax Returns. Individuals also registered as provisional taxpayers will have until the 31st of January 2022.
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