Can salaried employees claim a home office in South Africa?

A salaried employee can claim a home office deduction in South Africa, but the rules are tighter than for the self-employed or for commission earners, and most people who try do not qualify. You must clear the section 23(b) test that applies to everyone, and then section 23(m) removes most of the costs a freelancer or commission earner could claim, including the interest on your bond. What is left for a pure salary earner is a short list tied to the premises and your equipment.

In plain terms: if you earn only a salary, you can deduct an apportioned share of rates, repairs, and cleaning, plus wear and tear on the office equipment you use for work. You cannot deduct your bond interest, your phone and internet, or your stationery.

The first hurdle: section 23(b), which applies to everyone

Section 23(b) sets the gate for any home office claim. The part of your home you claim for must be:

• Regularly and exclusively used for your work. A corner of the lounge that doubles as a dining area fails the exclusivity test. The room has to be used for work and little else.
• Specifically equipped for that purpose, set up as an office with the desk, chair, and tools the work needs.

For an employee on a normal salary there is a further "mainly" condition: you must perform more than 50% of your work, measured by working time over the year of assessment, in that home office. A hybrid arrangement where you sit in the employer's office three days a week usually fails this, because the home office is not where you mainly work. Your employer must also permit you to work from home, and SARS can ask for confirmation of that on audit.

The second hurdle: section 23(m), which only employees face

This is the part that catches people. Section 23(m) limits the deductions available to an employee whose income is remuneration, unless that income is derived mainly from commission. For a pure salary earner, it disallows most of what a self-employed person or a commission earner could claim.

The biggest exclusion is bond interest. Interest on the bond over your home is a finance charge under section 24J, and from the 2023 year of assessment SARS treats it as blocked by section 23(m) for an employee who does not earn mainly commission. A commission earner can apportion and claim that interest. A salary earner cannot. The same applies to phone and internet costs, stationery, and accounting fees.

What section 23(m) does still allow a salary earner, where the section 23(b) tests are met, are costs tied to the premises and the equipment: an apportioned share of rent (if you rent rather than own), rates and taxes, repairs to the premises, and cleaning, plus wear and tear on the office furniture and equipment you use for work. That short list is why a salaried home office claim is usually modest.

How the floor-area apportionment works

You do not claim the whole cost of running your home. You claim the share that relates to the office, worked out by floor area:

• office floor area divided by total floor area of the home, as a percentage
• that percentage applied to the qualifying premises costs for the year

Wear and tear on your office equipment is handled separately. You claim it on the basis of how much you use the equipment for work, not on the floor-area percentage.

A worked example

You are a salaried employee. You work from home more than half your time, in a study used only as an office, 15 square metres in a 150 square metre home. The office portion is 15 / 150 = 10%.

Your qualifying premises costs for the year are rates and taxes of R12,000, repairs to the premises of R6,000, and cleaning of R8,000, so R26,000 in total. Your bond interest of R60,000 is deliberately not in that figure, because section 23(m) blocks it for a salary earner. The premises deduction is:

• R26,000 x 10% = R2,600 for the year

On top of that you can claim wear and tear on the desk, chair, and computer you use for work, based on your work use of them. If your top slice sits in the 31% bracket, the R2,600 premises deduction is worth R2,600 x 31% = R806 in tax. That is a small number, which is the real lesson here. A commission earner with the identical office, who may add the R60,000 of bond interest, would claim many times more from the same room.

One further consequence worth planning for. Claiming a home office means part of your primary residence has been used for trade, which can reduce the primary-residence exclusion when you eventually sell. For a modest claim over a few years the effect is usually small, but it is a real cost to weigh against a small annual deduction.

Check whether the claim is worth it

For a salary earner the home office deduction is narrow, and excluding bond interest often leaves little to claim, so weigh the effort against the result. Our guide to tax for freelancers and side income covers how the self-employed claim far more widely than employees, and the Home office calculator sizes the apportioned premises deduction. For the contrast, see how a commission earner is taxed, who escapes the section 23(m) limit, and how an independent contractor differs from an employee.

SARS sources:

• https://www.sars.gov.za/types-of-tax/personal-income-tax/filing-season/home-office-expenses/
• https://www.sars.gov.za/wp-content/uploads/Legal/Notes/LAPD-IntR-IN-2012-28-Home-Office-Expenses-Deductions.pdf