Independent tax advisor, Eugene Bendel, who recently made public the fact that billions of tax rands could be refundable to sufferers of mental illness and their families because tax advisors have overlooked a section of the Income Tax Act and related provisions of the Mental Health Care Act, is to take his research on a national road show aimed at informing tax advisors, medical practitioners, the pharmaceutical industry and the general public of their rights under the Income Tax Act.
In the process, he is likely to lock horns with the South African Revenue Service, who have already stated that they disagree with Bendels wide interpretation of the law. Bendel says "If I was in any way unsure of the legal position and was talking to the public at large about an aggressive tax saving strategy, I would be concerned. But, what we are looking at is the plain and factual interpretation of the appropriate laws".
The specific wording of the tax law states that not only the medical costs incurred by the sufferer of a mental illness as defined in the Mental Health Care Act are tax deductible but all other medical costs for all other conditions suffered by the spouse or child of the sufferer are tax deductible.
"That means, for instance, if a mother suffers from a clinically diagnosed post-natal depression, all the medical costs for treating that depression are tax deductible. And so too are all the medical costs incurred by the father, mother and children for any illness, mental or otherwise that they may suffer." Bendel adds "the costs we are talking about are all medical costs and thus would include cosmetic, medical and dental, surgery. Also, costs of alternative health care are deductible. This includes amounts paid to registered herbalists, chiropractors, physiotherapists, homeopaths and naturopaths."
Bendel has confirmed his findings with other prominent tax advisors and also with a senior advocate who specialises in tax. "This is not a matter of fine interpretation of the law. The issues are clear cut."
Why have other tax advisors not used this provision or brought it to the attention of the public before?
"I was doing some research last year into tax planning in relation to conventional medical expense claims and happened to broaden my investigation into mental health - not expecting to find something there but wanting to make sure I hadn't missed anything," Bendel says. "And I found that wed all been missing something."
"Then, when I discovered just how pervasive mental problems are, I knew I had to let people know that some relief is available, if only in the form of tax deductions."
Professor Lourens Schlebusch of Durban's Nelson Mandela School of Medicine has found that suicide is South Africa's third highest cause of death and is triggered by HIV/Aids, financial problems and depression.
Depression is only one of the hundreds of mental health disorders on the Diagnostic and Statistical Manual of Mental Disorders list - which also includes insomnia, learning disabilities, alcoholism, eating, sleeping and personality disorders, anxiety and bereavement.
"If you take depression on its own, according to Australian government statistics - which are comparable to those in the United States and the UK and have strong parallels in South Africa - everyone will at some stage in their lives be affected by their own depression or someone else's," Bendel says.
Depressive disorders affect approximately 18.8 million American adults or about 9.5% of the US population aged 18 and older in a given year.
Depression results in more absenteeism than almost any other physical disorder and costs employers, in the US for example, more than US$51 billion per year in absenteeism and lost productivity, not including high medical and pharmaceutical bills.
"In other words, by extrapolation, mental illness affects a vast number of South Africans and they have a right to know what their tax rights are in relation to their suffering," Bendel says.
Bendel, who qualified as a Chartered Accountant in 1991 and obtained a Masters of Tax Law in 1993, is so convinced of the correctness of his findings that he has staked his career on them, leaving Werksmans Attorneys to set up an independent practice that will specialise initially in assisting tax advisors with the provisions of the Income Tax Act and the Mental Health Care Act.
"We're talking about claims worth billions of rand not just for the current tax year or 2008, but for the past three years," Bendel says. "So theres a lot of work to be done by tax advisors in a very short space of time. I've got five months of in-depth research behind me, so I can short-circuit a lot of the spade work they would otherwise have to do."
With a photographic memory that helps him very quickly pick up anomalies in tax laws - used to good effect at KPMG in London for six years, where he worked with major UK and French banks - Bendel will expand his practice into other specialised areas in future.
"Right now, though, I'm intent on helping people who have largely unrecognised handicaps access their rights under the tax laws."
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