The 4 Requirements that must be met to Qualify for a Tax Deduction:
For home office expenses to constitute allowable deductions, they must meet the following 4 requirements:
- They must not be of a capital nature (improvements to the property)
- They must be directly related to the part of the house used for the purposes of trade (i.e. the office part only).
- This part of the house must be used regularly and exclusively for the purposes of the trade. Setting up a work area in the lounge / dining room would not constitute a ‘home office’.
- If the employee is in employment, the income received must be mainly in the form of commission (mainly meaning more than 50%). The employer must also not provide the employee with an office in which to perform their duties.