If you are one of many South Africans who are living with a disability or who have a spouse or child with a disability, you may be eligible to claim all of your out of pocket expenses relating to the disability.
What is considered a disability?
In order to receive tax deductions from expenses relating to a disability, we first need to determine what SARS understands a ‘disability’ to mean. SARS defines a disability 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, 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.”
SARS also provides tax relief for anyone suffering from a physical impairment. According to the Income Tax Act, a physical impairment is interpreted as a disability that is less restricting than the ‘disability’ defined above. This is understood to be a restriction on one’s ability to function or perform daily activities but only after therapy, medication and the use of any supportive devices, is less than a “moderate to severe limitation”.
Tax deductions on qualifying expenses
SARS classifications for ‘Disability’ and ‘Physical Impairment’ will impact on the amount that is eligible as a tax deduction.
For a ‘Disability’, you will be able to claim any qualifying expenses in full (inclusive of VAT) as a deduction from your income.
For a ‘Physical Impairment’, you will be able to claim any qualifying expenses in full (inclusive of VAT) as a deduction from your income. However, the qualifying expenses will only be deductible to the extent that the amount exceeds 7.5% of your income.
How can I claim for disability related tax deductions?
The first step to claiming for out of pocket expenses would be to download the ITR-DD form from SARS. You will complete part A of this form and meet with a doctor who will evaluate your, or your spouse or child’s disability and determine if it is categorised as ‘a disability’ or ‘physical impairment’ in eyes of SARS.
Once you are aware of how SARS classifies the disability, you can then claim appropriately for disability related expenses when you submit your tax return.
The ITR-DD is not submitted with your tax return but should be kept in case of an audit. A new ITR-DD needs to be completed once every 5 years.
If you, your spouse or child suffers from a disability and would like assistance finding out what is eligible to claim for and what is not, call Dirmeik Consulting on 021 421 4444.