Understanding medical deductions when it’s not straightforward
In recent weeks my practice has had some queries regarding medical deductions and what deductions are allowed to be claimed especially regarding expenses for dependents and dependents with disabilities
Some definitions as quoted in the Income Tax Act of 1962 are shown below for further clarity on these issues.
Can a taxpayer claim a tax credit for medical expenses if the payer does is not a member of the same medical aid or paid on behalf of a dependent? For example a husband pays for his ex-wife’s medical aid and he is not a member of that medical aid scheme. Or a tax payer pays for expenses for her parents who stay with her and are reliant on her income.
Yes, the tax credit can be claimed in terms of Section 6A of the Income Tax Act. Remember though that, in terms of the Tax Administration Act, the burden of proof falls on him to provide SARS with evidence such as proof of payments, invoices and receipts for medical expenses.
What is the process to claim disability expenses and what expenses are allowed?
As a result of changes to legislation, persons with a disability must have their disability re-confirmed in order to continue to claim the deduction. An ITR-DD form – Confirmation of Diagnosis of Disability must be completed by you and the duly registered medical practitioner. The ITR-DD mustn’t be submitted to SARS with your return, but must be kept with all your relevant materials for a period of five years should SARS ask for it in the future.
Some of the expenses that can be claimed include the following:
- Personal attendant care expenses
- Travel and other related expenses
- Insurance, maintenance, repairs and supplies
- Aids and other devices; excluding motor vehicles, security systems, swimming pools and other similar assets
- Continence products
- Service animals
- Alterations or modifications to assets acquired or to be acquired.
As this is such a detailed part of the legislation, it is generally advisable to contact your tax practitioner in order to gain clarification on these expenses before submitting a medical claim regarding disabilities.
a) a person’s spouse;
b) a person’s child and the child of his or her spouse;
c) any other member of a person’s family in respect of whom he or she is liable for family care and support; and
d) any other person who is recognised as a dependent of that person in terms of the rules of a medical scheme or fund contemplated in section 6A(2)(a)(i) or (ii),
at the time the fees contemplated in section 6A(2)(a) were paid, the amounts contemplated in paragraph (a) and (b) of the definition of ‘qualifying medical expenses’ were paid or the expenditure contemplated in paragraph (c) of that definition was incurred and paid
‘child’ means –
a person’s child or child of his or her spouse who was alive during any portion of the year of assessment, and who on the last day of the year of assessment—
a) was unmarried and was not or would not, had he or she lived, have been—
i) over the age of 18 years;
ii) over the age of 21 years and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of such year; or
iii) over the age of 26 years and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of such year and was a full-time student at an educational institution of a public character; or
b) in the case of any other child, was incapacitated by a disability from maintaining himself or herself and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of that year.
‘disability’ means –
a moderate to severe limitation of any person’s ability to function or perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment, if the limitation—
a) has lasted or has a prognosis of lasting more than a year; and
b) is diagnosed by a duly registered medical practitioner in accordance with criteria prescribed by the Commissioner
‘qualifying medical expenses’ means—
a) any amounts (other than amounts recoverable by a person or his or her spouse) which were paid by the person during the year of assessment to any duly registered—
i) medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopedist for professional services rendered or medicines supplied to the person or any dependent of the person;
ii) nursing home or hospital or any duly registered or enrolled nurse, midwife or nursing assistant (or to any nursing agency in respect of the services of such a nurse, midwife or nursing assistant) in respect of the illness or confinement of the person or any dependent of the person; or
iii) pharmacist for medicines supplied on the prescription of any person mentioned in subparagraph (i) for the person or any dependent of the person;
b) any amounts (other than amounts recoverable by a person or his or her spouse) which were paid by the person during the year of assessment in respect of expenditure incurred outside the Republic on services rendered or medicines supplied to the person or any dependent of the person, and which are substantially similar to the services and medicines contemplated in paragraph (a); and
c) any expenditure that is prescribed by the Commissioner (other than expenditure recoverable by a person or his or her spouse) necessarily incurred and paid by the person during the year of assessment in consequence of any physical impairment or disability suffered by the person or any dependent of the person.
Who is Armando Small?
Small is a certified tax adviser and owner of Capstone Group. His company provides a range of services from bookkeeping, audits and tax services to secretarial and trust services. He is a self-proclaimed Jack-of-All-Trades who will admit that he is still not entirely sure of what he wants to do with his life. What he does know, however, is that he is not interested in taking employment; he wants to be an employer