Sars proposal to reduce tax benefits will make remedial schools unaffordable for many parents
THE South African Revenue Service (Sars) has issued a proposal that aims to reduce the tax benefits previously granted for fees paid to remedial schools. This may be the straw that breaks the camel’s back, because many parents who are struggling financially will no longer be able to afford to send their children to these schools.
Up to last year, Sars allowed taxpayers a rebate towards fees paid to remedial schools. Now Sars wants to remove this tax benefit, saying the fees for remedial schools relate to education and not disability.
However, most of the special needs school fees are paid towards special needs and disability. The parents have no choice but to send their children to the remedial schools. Because of their disabilities, the children cannot cope or pass their grade in a mainstream school. In many cases, the mainstream school teachers have advised the parents to move their children to a remedial school.
There are very few government remedial schools, and they have long waiting list. The private remedial schools are expensive, because they have to cover the costs of remedial teachers, other specialised therapists and small classes. Most parents struggle to afford the private school remedial fees. If the tax rebate is removed, this will increase the financial burden on these parents. Many of them won’t be able to afford to keep their children at remedial schools.
Up until the 2020 year of assessment, Sars granted taxpayers the rebate of the cost of the special needs school fees to the extent that the fees exceeded the closest public school fees. About 33.3 percent of this amount was allowed for disability tax relief. This allowed some financial support, helping parents to cover the costs of these special schools.
With effect from March 1 last year, Sars had changed the rules, such that one could claim private special needs school fees only to the extent that such fees exceeded the fees of the closest private mainstream school. This effectively means there is no rebate. The amendments resulted in engagements with Sars between the Learners with special educational needs (LSEN schools) and other stakeholders, in which they expressed their dissatisfaction with the amendments. Following these meetings, Sars has now issued an updated list of qualifying physical and disability expenditure.
In the updated draft list, Sars proposed that school fees no longer qualify as a claimable expense and instead will only allow a claim for interventions. This will require every special needs school to prepare a document each tax year that provides a breakdown for each student that demonstrates how much the school fees were and to itemise every intervention and the specific cost of each intervention for that particular child. The school fee portion will then be excluded from the claim and only allowable interventions may be claimed.
There are many special needs school where the significant majority of the school fees currently paid go towards simply providing the special needs education. If the claim is limited to interventions only, the parents at these schools will receive a very limited rebate under the Sars proposal.
The Sars proposal also brings about administrative issues for the schools and the parents. It will also be difficult to ascertain how much the claim is likely to be, which will make it difficult for parents to budget and assess affordability.