Tax­man lists ex­penses you can claim for a broader range of dis­abil­i­ties

Weekend Argus (Saturday Edition) - - GOODPASTIMES - LAURA DU PREEZ

The ex­penses you in­cur as a re­sult of any dis­abil­ity that has a “moderate to se­vere” im­pact on your life, or that of a de­pen­dant, will be fully tax-de­ductible from this tax year (2009/2010).

This means that the ex­penses you in­cur as a re­sult of a wider range of dis­abil­i­ties will now qual­ify for full tax de­duc­tions. Pre­vi­ously only those you in­curred as a re­sult of cer­tain nar­rowly de­fined dis­abil­i­ties were al­lowed.

How­ever, where pre­vi­ously any ex­penses were tax-de­ductible, the ex­penses for which you can claim will have to ap­pear on a list con­tained in reg­u­la­tions to be pub­lished un­der the In­come Tax Act.

The South African Rev­enue Ser­vice (SARS) re­cently re­leased a dis­cus­sion pa­per that con­tains the pro­posed list of ex­penses you will be able to claim against tax if you or your de­pen­dants have a qual­i­fy­ing dis­abil­ity.

The list in­cludes aids and de­vices, such as hear­ing aids, or­thopaedic or sur­gi­cal equip­ment, wheel­chairs and crutches; travel and re­lated ex­penses; the cost of hir­ing a care­giver; prod­ucts re­quired for in­con­ti­nence; the cost of ob­tain­ing and keep­ing an­i­mals, such as guide dogs; and the cost of mod­i­fi­ca­tions to as­sets such as al­ter­ing your house to ac­com­mo­date a per­son in a wheel­chair.

SARS says the rea­son for the list is that the de­duc­tions it al­lowed in the past were open to in­ter­pre­ta­tion and this led to un­cer­tainty.

For ex­am­ple, SARS says, dis­abled tax­pay­ers would claim the cost of ac­quir­ing a ve­hi­cle, in­stead of just the cost of mod­i­fy­ing the ve­hi­cle to cater to their dis­abil­ity. The cost of ac­quir­ing the ve­hi­cle is not nec­es­sar­ily in­curred as a con­se­quence of a dis­abil­ity, whereas the costs of mod­i­fy­ing it are di­rectly linked to the dis­abil­ity, SARS says.

The ex­penses you in­cur as a re­sult of phys­i­cal im­pair­ments that have only a mild im­pact on your life or that of a de­pen­dant will be de­ductible only to the ex­tent that they ex­ceed 7.5 per­cent of your tax­able in­come, un­less you are over the age of 65.

Tax­pay­ers over 65 can deduct any med­i­cal ex­penses not re­couped from a med­i­cal scheme.

Pre­vi­ously, in or­der to claim dis­abil­ity-re­lated ex­penses in full, you, your spouse or child had to be “hand­i­capped” as de­fined by the In­come Tax Act.

The Act de­fined a hand­i­capped per­son as some­one who: Is blind; Is deaf; Is per­ma­nently dis­abled and re­quires a wheel­chair, cal­liper or crutch to move around; Has an ar­ti­fi­cial limb; or Suf­fers from a men­tal ill­ness as de­fined in the Men­tal Health Care Act.

You were also al­lowed to claim for phys­i­cal dis­abil­i­ties such as bad eye­sight and hear­ing prob­lems, or for ill­nesses such as di­a­betes, mul­ti­ple scle­ro­sis and asthma.

DIS­ABIL­ITY DE­FINED

As of March 1 this year, the In­come Tax Act was amended to in­tro­duce a de­duc­tion for peo­ple with dis­abil­i­ties, and the term “dis­abil­ity” was de­fined.

A dis­abil­ity is de­fined as a “moderate to se­vere lim­i­ta­tion” of your abil­ity to func­tion or per­form daily ac­tiv­i­ties as a re­sult of a phys­i­cal, sen­sory, com­mu­ni­ca­tion, in­tel­lec­tual or men­tal im­pair­ment.

Your dis­abil­ity must have lasted more than a year or be ex­pected to last more than a year, and you must have been di­ag­nosed by a reg­is­tered med­i­cal prac­ti­tioner.

A “moderate to se­vere lim­i­ta­tion” is in­ter­preted to mean a sig­nif­i­cant re­stric­tion on your abil­ity to func­tion or per­form one or more ba­sic daily ac­tiv­i­ties af­ter max­i­mum med­i­cal cor­rec­tion.

The ex­penses you claim as a tax de­duc­tion will have to be ones that were nec­es­sary, and if you claim for de­pen­dants they must have been on your med­i­cal scheme at the time the ex­penses were in­curred.

To claim a dis­abil­ity-re­lated tax de­duc­tion, a reg­is­tered med­i­cal prac­ti­tioner will have to com­plete a form on an an­nual ba­sis.

The Act now also de­fines a “phys­i­cal im­pair­ment” as an im­pair­ment that does not have a se­vere im­pact on your daily ac­tiv­i­ties.

If you are un­der 65, ex­penses for such a “phys­i­cal im­pair­ment” will be tax-de­ductible only to the ex­tent that they ex­ceed 7.5 per­cent of your tax­able in­come. This is the limit any tax­payer needs to ex­ceed be­fore be­ing able to claim an un­re­couped med­i­cal ex­pense against tax.

For ex­am­ple, if your vi­sion is not per­fect but can be cor­rected with glasses, you will be able to claim against your tax­able in­come the un­re­couped ex­penses re­lated to your vi­sion only where th­ese ex­ceed 7.5 per­cent of your tax­able in­come. This means you would need to spend a high amount be­fore you qual­ify for a de­duc­tion for what is now de­fined as a phys­i­cal im­pair­ment.

Your sight would have to be very poor be­fore you could be re­garded as hav­ing a dis­abil­ity and en­ti­tled to a full de­duc­tion for your ex­penses.

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