Expenses Incurred From Working At Home Qualify For Tax Deductions

In an article by the Business Times on the 2nd of June 2020, the Inland Revenue Authority of Singapore (IRAS) informed the publisher that expenses incurred from working from home can be deducted against employment income.

Here are the qualifying criteria:

The expenses must be incurred while carrying out duties; and
These expenses must not be reimbursed by the employer; and
These expenses must not be capital or private in nature.

An example of a capital expense would be the installation of a WiFi network and connection fee.

The WiFi broadband service or subscription fee is an allowable deduction if it were set up only when the employee was made to work from home. If a service or subscription was already existing before the start of the employee working from home then this is not an allowable expense.

Examples of such expenses include additional power and telecommunication bills incurred when employers are required to work from home. The timeframe for this is not limited to the circuit breaker alone. It covers any period whereby the employee is working from home.

Employees who incur these work-related charges in 2020 may claim for a deduction against employment income in next year’s income tax filing. Equal apportionment basis is allowed for individuals in the same household if there is more than one person working from home.

As it may be difficult for an employee to calculate the exact amount of the allowable expenses that have been incurred, IRAS will accept the difference in electricity and telephone bills before and after working from home.

If government rebates have been provided, taxpayers have to ascertain the portion of electricity expenses incurred for work purposes based on the amount of charges net of government rebates.

Taxpayers have to keep proper records for five years. This includes documentation regarding how the expenses were calculated and a confirmation from the employer stating the period of working from home.

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.

Yours Sincerely,
The editorial team at Singapore Secretary Services

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