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Tax Guide for parents caring for a child with disabilities Please read the important information provided by SARS on the link below: SARS tax guide on the determination of Medical Tax and Deductions Further helpful guidelines in easy to read format follow below: NOTE: In this guide reference is made to Bendels Consulting. Bendels Consulting is a Tax Firm specialising in the provision of tax compliance and advisory services to individuals where there is a “disability” in the family. This guide has been compiled by Bendels Consulting for your benefit. We declare that no financial benefit is derived through placement of this information and it is not intended as an advert for Bendels Consulting. However, we recommend that parents consider their specialist services to obtain maximum tax relief within the parameters of the legal framework, not only for the current tax year, but possibly also for prior tax periods. The tax relief available in respect of medical and “disability” related expenditure stems from tax laws and SARS practices that have been amended and changed on a regular basis in past years. During this time, there have been changes to the way in which one confirms the diagnosis of a “disability” for tax purposes, the expenditure items that may be taken into account, the limitations that need to be applied to certain expenses and the progressive change from a tax deduction system to a tax credit system. Many parents have already obtained substantial tax refunds; many more parents continue to receive tax refunds on a regular basis. 1.  What is the relevance to me as a Parent of a pupil in tax terms? As Tomorrow’s People College is a mainstream school also catering for learners with special learning needs, it is possible that all medical expenses incurred by you could be taken into account for tax purposes, including fees paid to Tomorrow’s People College; subject to limitations.   2. Who qualifies for this tax relief? If your son or daughter has a limitation on their ability to perform daily activities and such limitation falls within the definition of a “disability”, as defined for tax purposes, then all medical and “disability” expenses should be able to be taken into account for tax purposes; subject to limitations. 3.  What is the definition of a “disability”? The definition of a “disability” is set out in the Income Tax Act and means “a moderate to severe limitation of a person’s ability to function or perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment, if : (a) the limitation 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 (i.e. SARS).   4.  How do I know if my son or daughter has a “disability”? If you have been referred to a registered medical practitioner and have received a formal diagnosis, you will know whether he/she has a disability. 5. Does that automatically mean that my son or daughter falls within the definition set out above, in accordance with the criteria prescribed by SARS? No.  SARS have issued a form “Confirmation of Diagnosis of Disability” (form ITR-DD), a copy of which is attached for ease of reference). Click to access ITR-DD. 6.   What do I need to do with the ITR-DD form? The form must be completed by the parent and a duly qualified medical practitioner.  If your medical practitioner confirms that your son or daughter does have a “disability”, the form should be retained by you before submitting your tax return.  It does not need to be submitted with your return but retained in case SARS request it. 7. Will my doctor, psychologist, therapist etc. be comfortable completing and signing the relevant sections of the ITR-DD? In order for your son or daughter to have a “disability” as defined in tax law, it is a requirement in our law that the form be completed by the appropriate health practitioner.  If your practitioner has an issue, or is not sure how to complete the SARS legal form, contact your financial advisor for further information, or alternatively you can contact Richard Rogers, a tax law advisor who specializes exclusively on tax matters relating to disabilities, at rrogers@bendelsconsulting.co.za 8. Does the form need to be completed for every tax year? If your duly registered health care practitioner completes the form and confirms therein that your son or daughter’s “disability” is of a permanent nature, then you only need to obtain the form every five years. 9. What happens if my health care practitioner does not consider the “disability” to be of permanent nature? You will need to get the form duly completed every tax year. 10.  Can I request a tax certificate from Tomorrow’s People College? Tomorrow’s People College will issue a tax certificate on request. This will reflect the school and other fees paid for your child’s special needs education during the applicable tax year. 11.  What do I do with this tax certificate? As noted above, if you obtain the ITR-DD then all your medical and “disability” expenses should be able to be taken into account for tax purposes (subject to limitations), which is likely to include the Tomorrow’s People College fees.  The certificate should, therefore, be used as part of the calculations required to be performed prior to submitting your tax return. 12.  What do fees paid to Tomorrow’s People College have to do with medical expenses? Tax law is complex and medical expenses do not just include your medical aid contributions and your share of claims not paid by your medical scheme (you should receive a separate tax certificate from your medical scheme reflecting these figures).  Other expenses which may be allowable as “medical expenses” include expenses relating to your son or daughter’s “disability” – that is the connection between the Tomorrow’s People College fees and medical expense as in the absence of any “disability”, your son or daughter would not need the specialized care and attention that they get at Tomorrow’s People College. 13. Could there be other expenses that could also be deductible as a result of my son or daughter’s “disability”? Yes, but that would depend entirely on your own facts and circumstances and what expenses you have paid in relation to the “disability”.  Specialist tax advice is recommended to ensure that your claim is maximized in accordance with the law and therefore pay less tax. You should contact your tax law advisor regarding this, or you can contact Richard Rogers on rrogers@bendelsconsulting.co.za . 14.  What can be done if I did not claim all my medical expenses in previous years? If you qualified to receive the applicable tax relief in previous years but you did not take “disability” into account when attending to your tax matters, it is possible that you could be able to re-visit those prior years. 15.  How far back can I go in re-opening previous year’s tax returns? This is dependent on your unique circumstances. 16.  How do I go about re-opening previous tax years? Specialist tax law advice is recommended and will probably be money well spent as the refunds can be considerable if all claims have not been made for the previous years. You can contact Richard Rogers at rrogers@bendelsconsulting.co.za . Disclaimer This Tax Guide has been prepared for information purposes only, for Parents (or any parties related thereto, or any advisors of Parents, or parties related thereto). Nothing in this guide should therefore be construed as the provision of any advice whatsoever on the part of Tomorrow’s People College, any parties related to Tomorrow’s People College, or Richard Rogers, Bendels Consulting, or corporate entity, or otherwise, relating to Richard Rogers or parties related to him. Specialist tax advice is recommended. Additional information The information below is applicable in respect of the 2014 tax year. The tax law in respect of medical and “disability” expenses changes from year-to-year and thus the information outlined below may not be applicable to hte current tax year. Beacuse of the complexities you are advised to seek professional assistance. The general principle in our tax law is that “medical expenses” can only be taken into account to the extent that they exceed 7.5% of the taxpayer’s taxable income. There are two exceptions to this rule: 1. Where the taxpayer is over 65; and 2. Where the taxpayer, his or her spouse or child suffers from a “disability”. The exception means that all “medical expenses” of the whole family are tax deductible (subject to certain limitations). In the context of Tomorrow’s People College, point 1 is not addressed below. The use of the term “medical expenses” has wide ramifications and there are potentially considerable expenses which may be deductible as “medical expenses”. Medical expenses can be summarized broadly as follows: 1. Contributions to your medical aid scheme for the entire family; 2. Medical expenses not recovered from your medical scheme i.e. your share of claims of unpaid expenses as shown on your Medical Scheme tax certificate; and 3. Any expenditure necessarily incurred and paid in consequence of a “disability”. Points 1 and 2 are self-explanatory. Point 3 above is where the complexities arise, or indeed where the significant tax relief may be derived as a consequence of the substantial expenses which Parents incur as a result of having a child with a “disability”. There is no definitive list of expenses which would qualify under point 3 for tax purposes.  Each case needs to be based on its merits, facts and circumstances and specialist tax law advice is recommended to ensure that the maximum expenses are claimed as deductions and that the claims should be allowable. Notwithstanding the fact that specialist advice is recommended, the following examples of expenses are of relevance: Tomorrow’s People College fees, if your child was formally diagnosed with a “disability” by a registered medical practitioner; Travel expenses for your child with a “disability” to and from Tomorrow’s People College; Attendant care costs required to look after your child with a “disability”; After care costs, au pairs specifically used to attend to your child with a “disability”; Facilitator and/or private tutor fees; Extra lessons; Special educational toys; Costs of alterations or modifications to your assets incurred and required as a consequence of your child’s “disability”; Specialized therapies; Horse riding and/or other interventions which may be considered necessary for therapeutic reasons. The above list is not exhaustive and there may be several other items of expenditure which may be claimable as deductions. It is recommended that all receipts, irrespective of whether you think the expense may be deductible or not should be retained by you. Your tax law advisor will then be able to advise on what amounts should be claimed and in any event, SARS are in all probability likely to request receipts to support your claim for deductions. The items listed above should not be read as a guarantee that the expenses will be allowable, although experience shows that in most cases they are. However, each case will depend on its own merits. Your tax law advisor can advise you on the extent to which the above expenditure items and your medical aid contributions translate to a tax refund. If expenditure items are claimed which are not allowable or if the correct limitations are not applied, SARS could, in addition to not allowing such overstatement, levy penalties for overstating your tax relief. Accordingly, it is advisable that you seek specialist tax advice to ensure that you are receiving the maximum tax relief available to you, within the confines of the applicable tax legislation. If you would like, you can contact Richard Rogers using rrogers@bendelsconsulting,co.za or visit www.bendelsconsulting.co.za for more information. Disclaimer This note has been prepared as a guide for the benefit of Parents and prospective Parents of Tomorrow’s People College, exclusively.  The document should not be distributed to any third parties. The guide is in no way to be construed as the provision of tax law advice to any party, directly or indirectly on behalf of Bendels Consulting, Richard Rogers or parties related thereto. Bendels Consulting, Richard Rogers or any party related shall therefore accept no responsibility in any way for any reliance placed upon the information contained in this guide. Back to top
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