A special thank you to Lauren Schoeman for this contribution about tax and disabilities.
There are two types of medical expenses:
Contributions to a medical aid
Out-of-pockets expenses, that are paid by the taxpayer and not recovered from the medical aid (e.g. payments to registered doctors, dentists, pharmacists for medicines on prescription)
These expenses are used in the calculation of the taxpayer’s medical tax credit. A medical tax credit acts as a rebate and reduces your tax payable.
A taxpayer who has a spouse or child with a disability (or who himself is disabled), can benefit from greater tax relief when calculating their medical tax credit. This is due to the fact that non-medical expenses that are necessary and incurred as a result of the disability, can also be taken into account in determining the medical tax credit.
A disability is defined as:
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.
The limitation must have lasted or has a prognosis of lasting more than a year
and must have been diagnosed by a duly registered medical practitioner.
Examples of non-medical expenses that would qualify:
training of the parents or the care attendant, in respect of the disability
insurance, maintenance, repair and supply of aids, special devices and artificial limbs
Taxpayers have to be able to provide proof of payment and supporting documentation for these expenses during the tax year, should SARS request it.
An ITR-DD form (confirmation of diagnosis of disability form for an individual taxpayer) must be completed by the taxpayer and a qualified medical practitioner.
The form can be found on the SARS website and it needs to be completed every five years, for those with a permanent disability. It must not be submitted with your tax return, but retained in the event that SARS requests it.
A physical impairment is not defined as a “disability” if it is:
less than a moderate to severe limitation of a person’s ability to function or perform daily activities,
no longer applicable after maximum correction (i.e. appropriate therapy, medication and use of devices)
Certain expenses qualify if they are as a result of a physical impairment and are required or needed, as well as paid by the taxpayer, during the year of assessment. There will however be limitations when calculating the medical tax credit, as it is not a disability.
Lauren Schoeman CA(SA)
Registered Tax Practitioner