Tax warning for South Africans working from home

As the 2025 tax season approaches, experts warned salaried employees working from home that strict rules in the Income Tax Act severely limit the deductions they are able to make.

Tax Consulting South Africa tax consultant Thokozile Kumalo said that the number of South Africans working remotely is increasing, which has seen more employees turn to tax practitioners for guidance.

This is because the Income Tax Act includes specific provisions regulating these home office deductions, sometimes requiring additional help to decode.

Commission earners generally have more flexibility, but salaried employees working from home often face challenges because of the more restrictive rules applying to them.

If you earn only a fixed salary, work from home full time, and use a dedicated space solely for work, there may be grounds for claiming home office expenses, provided you meet the strict requirements set out in law.

The three key sections of the Income Tax Act that govern these deductions are:

• Section 11(a) – General deduction formula
• Section 23(b) – Use of home for trade
• Section 23(m) – Limitations for salaried employees

Section 11(a) is often called the “general deduction formula.” It allows a taxpayer who is “carrying on a trade” to deduct “expenditures and losses actually incurred in the production of income, provided such expenses are not of a capital nature”.

In the context of a salaried employee, “trade” includes employment. Therefore, an employee who earns remuneration is seen as “carrying on a trade” in the form of employment.

If a salaried employee incurs home office expenses to produce employment income, those expenses will conceptually fall within the scope of section 11(a).

However, Kumalo stressed that when claiming home office expenditure, section 11(a) should be applied in conjunction with the limitations imposed by Section 23, which are outlined below.

Deductions are strict and conservative

Kumalo explained that the first limitation is found in Section 23(b), which prohibits claiming deductions for expenses related to premises used for domestic or private purposes.

However, there is an exception to this rule in the case of a dedicated area in the premises that is used for employment purposes.

This area must be specifically equipped for such employment and used regularly and exclusively for employment.

For salaried employees, more than 50% of their duties must be performed in the home office, which must also be a clearly defined and exclusive workspace.

Humalo said that, in theory, full-time remote workers with a defined, exclusive home office may meet all of these requirements and qualify for a successful claim.

However, the limitation in section 23(m) may invalidate their claim, as it often disallows deductions for expenses that are not directly tied to the use of the premises.

Therefore, Khumalo said this section disallows most deductions under Section 11 for employees who earn a salary and do not earn more than 50% of that income as commission or variable-based remuneration.

For taxpayers who earn a fixed salary only, section 23(m) prohibits deductions for most expenditure, losses, or allowances that would otherwise be allowable under section 11(a).

Due to this section, only expenses directly tied to the use of the premises, such as rent, electricity, and cleaning, may be considered, and only under very specific conditions.

“In short, while section 11(a) allows the deduction of qualifying expenses, and section 23(b) adds strict conditions for home office use, section 23(m) disallows most deductions for salaried earners,” Kumalo explained.

“In practice, this means that even if the general and home-office-specific conditions are met, fixed-salary earners are still barred from deducting most business-related expenses.”

This includes expenses such as internet and cell phone costs, accounting fees, and stationery. Therefore, Kumalo advised fixed-salary earners working from home full-time who wish to claim deductions should ensure:

• Their employer should provide a formal letter confirming remote work
• They have a dedicated, exclusive workspace
• More than 50% of their duties should be performed in that space
• Their claim is limited to premises-related expenses

Even then, Kumalo said SARS may challenge deductions beyond the narrow exemptions outlined above. Therefore, the onus is on the taxpayer to prove that the deduction should be allowed.