The South African Revenue Service (Sars) has backtracked on its intention to exclude certain expenses which can be claimed as tax deductible, including physical impairment or disability expenditure.
The controversial decision raised public ire after it emerged that this would exclude parents of disabled children from claiming against expenses such as school fees. This is because the revised “List of Qualifying Physical Impairment or Disability Expenditure” excluded such expenses and only allowed for claimants to log claims incurred as a result of medical expenses, with few exceptions.
But on Wednesday Sars issued a statement noting the public comments following the publication of the draft list.
Sars spokesperson Sandile Memela claimed that many of these comments appeared to be based on a misunderstanding of the intent of the proposed amendments to the list, which were triggered by submissions from stakeholders seeking to address practical issues that arose from the current Disability List.
In order to permit more time to engage with stakeholders and to explain the intent behind the changes and understand the concerns raised, a decision has been taken to withdraw the draft Disability List.
“A further draft Disability List may be published once this process has concluded,” Memela said in a statement.
Last week, Sars argued that school fees were not in the consequence of a disability but in the consequence of education.
The current disability list, which was published in 2020 for the 2021 tax year onward, will remain in force until it is replaced.
The list was introduced in 2009 by way of an amendment to the Income Tax Act, 1962, which required the Sars commissioner to prescribe a list of qualifying physical impairment or disability expenditure.
The amendment was introduced to increase clarity and certainty for both Sars and taxpayers on what type of qualifying disability expenses would be allowed for tax purposes.
The current list comprises the following:
Personal care attendant expenses
Part A of the list refers to money you spend on acquiring the services of a caregiver for a disabled person These include:
- Money you’ve paid for a caregiver to look after a person with a disability, unless the same person is also your full-time domestic worker.
- Living expenses incurred from having a live-in personal care attendant, which is limited to the additional
cost of electricity, water and food. This is deemed to be 20% of the “national minimum wage” as defined in the National Minimum Wage Act 9 of 2018.
- Cost of training a personal care attendant or a family member to take care of a person
with disability. The cost must be paid to a service provider that is in the business of providing such training.
- Accommodation expenses paid for a personal care attendant for the purposes of training or business and holiday travel of the person with a disability.
- Accommodation expenses for the purposes of training for a family member.
Part B of the list refers to transportation costs incurred as a result of the disability or in acquiring and maintaining the services of a caregiver. This includes travel expenses for training.
Part C of the list refers to expenses incurred relating to insurance, maintenance, maintenance and supplies of listed goods needed by the disabled person. These include batteries for hearing aids, wheelchairs and prosthetics as well as related insurance costs. The qualifying goods insured must be specified in the insurance policy.
Part D and E refers to the cost of buying the equipment mentioned above.
Part F of the list includes:
1. Deaf-blind intervening services.
2. Lip-speaker services.
3. Note-taking services, including real-time captioning.
4. Reading and navigation services.
5. Rehabilitative therapy to teach a person to function or perform basic daily activities (for
example, how to use a wheelchair, dressing, grooming etc.).
6. Sign-language interpretation services used by a person with a hearing impairment.
7. Special education needs schools mainly for learners with disabilities.
The first Disability List came into effect for the 2010 tax year onward, and was based on the amended legislative requirements that the expenditure must be ”necessarily incurred, and paid by the person in consequence of any physical impairment or disability”.
The Disability List was updated for the 2013 tax year onward, and thereafter for the 2021 tax year onward, following a consultation process.
“The guiding principle for Sars has always been to identify those additional expenses a person with a disability would incur, without which the person would not be able to perform the activities of daily living,” said Memela.
“With regard to school fees, the qualifying expense is currently the difference between the fees paid to a private, special-needs school and closest fee-paying private school, or the difference between the fees paid to a public special needs school and closest fee-paying public school.”