The year 2020 has been a rollercoaster for all working individuals, with lockdown forcing many people to work from home. This opens up the ability to claim expenses for working from an office at home.
What is the impact of this?
If you are an independent contractor or a salaried employee who earns commission which is greater than 50% of your total salary income your expenses are claimable as usual with the addition of home office expenses.
If you do not qualify as above you are still able to claim home office expenses, there is however some conditions that need to be met:
We require a confirmation letter from your employer requiring you to work from home.
Or more than 50% of your working time(hours) was spent in the home office.
The space used as an office should be dedicated and only used as an office.
It is crucial that you ensure that all expenses claimed are reasonable and that you can prove that it was incurred (slips and invoices available).
Practitioners have noticed that when home office is claimed that 90% of tax returns are selected for verification, this should not be feared however emphasizes the importance of ensure you have the ability to prove these expenses.
Please find the expense you are allowed to claim under our Tax Forms, Expenses form on the second sheet. Ensure you fill in the square meterage as this is crucial for the calculation.
These expenses will reduce your taxable income which in turn reduces the tax required.
You are welcome to contact us should you have any further questions or require further explanation.
It should be noted that if you own the property you are claiming these expenses for it will result in an implication of capital gains tax which will come into play upon the sale of the property. We can discuss this with you if you would like, as each person's situation is unique and will differ. We can also compare the capital gain tax impact against the home office expense claim to see which is more advantageous for you.