The Buck Stops Here

The sign "The Buck Stops Here" that was on President Truman's desk in the White House is something many people in this country involved in the tax and healthcare industry would appear to be trying to keep well away from their desks at the moment. No doubt they are doing so, at present, with good reason. But, the moment of truth is fast approaching as the 2007 tax filing season is due to commence in the middle of July. It would appear that the sooner the proverbial "sign" appears on the desks of those involved in the industry, the better it will be financially for them.

What has created the situation is recent findings in the South African income tax legislation that billions of tax is due to taxpayers. Broadly, the issue is that where a taxpayer, or a family member, suffers from a mental illness (the list of illnesses exceed 200 and include "everyday" illnesses such as depression, insomnia, anorexia, ADD, ADHD, bereavement, sexual dysfunction, bi-polar disorder, anxiety), then all irrecoverable medical expenses and medical aid contributions of the taxpayers whole family are deductible for tax purposes.

To put the scale and magnitude of the issue into perspective, there are approximately 5 million registered individual taxpayers. It is estimated that at least 20% (depression alone accounts for about 10%) are affected by the mental health provisions. So, we are looking at around 1 million taxpayers who could get tax back (or pay less tax than they may otherwise have thought possible), because of these findings. In addition to this, even taxpayers who are not registered for tax because they only pay SITE can get tax back.

These findings were made public in the business press more than four months ago. In fact, the issue was the lead front page story in the Business Report (2 February 2007) and page 2 of the Business Day (2 February 2007). Yet, despite the length of time that has passed, the high profile of the issue and indeed the fact that several billions of rand are at stake, key players in the industry would appear to have done little, or nothing, at least publicly yet about bringing the issue to the attention of those in need.

There are several players in the industry; they include medical schemes and their administrators as they send out income tax certificates, SARS, The Treasury, healthcare brokers and consultants, financial planners, tax advisors, employers, medical practitioners and pharmaceutical companies.

Each of the abovementioned has their own business objectives and goals. As such, it is arguable that it is not the responsibility of any of them to pro-actively give advice on the issue and that the buck genuinely does not currently stop with any of them.

As a boutique consultancy specialising in tax in the healthcare industry, Bendels Consulting accepts that "The Buck Stops Here"! With the stakes so high in terms of tax due to taxpayers in respect of medical expense claims and the complexity of the issues, specialist tax advice is recommended in order to ensure the most optimum tax result.

Written by:Eugene Bendel - CEO
Richard Bendel - COO
Bendels Consulting