I have filed a Notice of Objection but also telephoned SARS on 2 occasions and it appears that the grounds for the disallowance of the deduction is that I do not receive remuneration but have captured Home Office Expenses in block 4028 on the Return. The
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We accept that you filed the notice of objection based on the grounds for the assessment given on the assessment (the IT34). You didn’t ask for reasons for the assessment. You didn’t provide us with the grounds for the disallowance of the deductions. You also didn’t indicate that you are not in receipt of remuneration – in other words that the deduction is made against income derived from another trade.
The relevant law (relating to the study at home) is found in section 23(b) - domestic premises used for trade purposes, which must be read with section 23(m) if the individual is in receipt of remuneration (you mentioned 3601). Section 23(m)(iv) is relevant to the deduction which is allowable in this instance. Of course, the expenditure must first qualify for a deduction under section 11(a), (d), 24J, etc. Section 23(b) then limits the deduction to the trade part by talking the private part of the expense away (in a sense).
Section 23(m) requires that the “remuneration is normally derived mainly in the form of commissions based on his or her sales or the turnover attributable to him or her”. Section 23(m)(iv) doesn’t have this limitation.
Section 23(b)(ii) refers to “his duties are mainly performed in such part”.
The law requires that the “part that is so occupied must be specifically equipped for purposes of the trade” and “regularly and exclusively used”. That doesn’t seem to be in dispute.
According to the SARS guide, the amount claimed in this respect must in fact be captured next to the code 4028. If the deduction is not made against remuneration, it should have been captured in the trade part of the return.