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Sars red-flags most claims for home-office expenses

The SA Revenue Service (Sars) has allowed only R1.1 billion of the R2.9bn claimed by taxpayers for home-office expenses, Sars commissioner Edward Kieswetter told a meeting of Parliament’s finance committees this month.

In the year to date, Sars received more than 76 000 returns in which taxpayers claimed home-office expenses. Sars’s risk engine stopped 86% of the claims, of which 79% have been processed. Taxpayers adjusted about 60.4% of these claims, yielding revenue of R545 million to Sars, he said.

When Sars initially red-flagged most of the home-office expense claims, about 3 300 taxpayers deleted their claims, yielding revenue of R334m.

The verification process resulted in R1.8bn of the expenses claimed being disallowed, leaving the total allowable home-office expenses claim at R1.1bn.

Kieswetter used the verification of home-office expenses as one example of how Sars’s risk management tools were ensuring that the fiscus receives its due.

Business Day quoted Sharon Smulders, the South African Institute of Chartered Accountants’ project director for tax advocacy, as saying it was likely that people fell foul of the requirement that home-office expense claims can be made only when work is conducted from an office specifically equipped and regularly and exclusively used for work purposes.

Saica has called for a relaxation of the exclusivity rule to one that stipulates that the home office should “mainly” be used for work purposes.

The 2021 Budget Review stated that National Treasury was conducting a review of the travel and home-office allowances. But Smulders said this would be too late for taxpayers who have submitted their 2020 and 2021 tax returns.

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