I have a query regarding the calculation for home office expenditure. When calculating the proportion of expenditure to claim, do we divide the home office space by the actual house space in square metres or do we divide it by the total land space?. For e
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Section 23(b) of the Income Tax Act refers to the “part” of “domestic premises … occupied for the purposes of trade”.
According to the Oxford dictionary, online, the word ‘premises’, as a plural noun, means “a house or building, together with its land and outbuildings, occupied by a business or considered in an official context.” And ‘domestic’, as an adjective, “relating to the running of a home or to family relations” and also “of or for use in the home rather than in an industrial or office environment.”
In the current practice generally prevailing, SARS uses in both the examples, the “total area (square metres [m2]) of the home study … in relation to the total area of his house …”