The Commissioner for the South African Revenue Service (SARS) today announced the publication of the prescribed list of qualifying expenses relating to physical impairment or disability and the diagnostic criteria for disability.
Previously a person with a disability could only claim their total medical expenses that were not covered by their medical aid if they were 65 years and older or if the Income Tax Act, 1962, regarded them as “handicapped”. The term “handicapped” was outdated. In addition, there was uncertainty regarding the tax deductibility of some of the expenses incurred in respect of a “handicapped” person.
Recognising this, the Income Tax Act, 1962, was amended in 2008 with effect from the 2009/10 tax year, so that people with disabilities can claim expenses, medical or otherwise, that enable them to function more fully in their daily lives. These new deductions apply if the taxpayer concerned, a child or spouse of the taxpayer has a disability.
The amendment also clarified which expenses SARS would allow as a deduction. However, for the aims of the law to be fully realised, the Commissioner is required to prescribe the qualifying expenses and the criteria for diagnosing a disability. Today’s announcement provides for the list of qualifying expenses and the diagnostic criteria, following extensive discussions with the representative bodies for people with disabilities, health professionals and other government departments.
Although the list of qualifying expenses is extensive, care has been taken to ensure that it does not exclude a legitimate expense that is not listed. Therefore, instead of a comprehensive list, it identifies broad categories of qualifying expenses and provides examples of expenditure that could be claimed.
With respect to the diagnostic criteria, disability is now viewed as an impairment to the body or mind that results in a moderate to severe limitation on a person’s ability to perform daily functions. A person may also now be diagnosed as permanently or temporarily disabled.
Claims by people with impairments that do not result in a moderate to severe limitation on a person’s ability to perform daily functions will still be subject to limitations. They may claim expenses related to their impairment only when such expenses exceed 7.5% of their taxable income.
To claim the qualifying expenses in full, a person with a disability must obtain a confirmation of their disability from a registered health practitioner. People who had previously been recognised as “handicapped” must also follow this procedure. In the case of a permanent disability, the confirmation will be valid for five years, while it will be valid for a year for a temporary disability.
The confirmation must be done on the prescribed form (ITR-DD) available from the SARS website (http://www.sars.gov.za/) or from any SARS office. Please note that these forms must not be submitted together with the tax return but must be produced on request by SARS.
The forms and prescribed list can be found on the SARS website by clicking on the below URL’s:
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