Sunday 23 September 2012

SARS eFiling: how to claim for medical expenses for mental or physical disability [updated 2012]

Since my initial posting some things have changed including some changes that SARS have made and some links are no longer working – so I decided to do an update.  A colleague has been asked numerous times for assistance on how to claim medical deductions from SARS for his son that has Asperger’s Syndrome so he asked me to update this article so that others can also benefit from his experience…

The financial burden on parents should not be under estimated - the expenses range from therapies, treatments, medication, assessments, special schools, facilitators, extra lessons, gadgets, treatment programs, books, [...add your expenses here....]

Disclaimer: Please note that I’m no tax expert – I have found all of this out on my own and through discussions with various people. I could be wrong, so if you are not sure, then please contact SARS to confirm: SARS contact centre toll free on 0800 00 7277 (0800 00 SARS).

The information for my original blog article was gathered from an ASCON support group meeting (ASperger CONnections) in Cape Town held on 24th October 2007 where Lindsay Coetzee of SARS (South African Revenue Services) gave us information relating to tax deductions allowable and how to go about claiming these. 
As far as I can see, the main change relates to how one proves to SARS that one has a dependent with a disability/handicap.  Previously, a letter needed to be provided every year – it has now changed and there’s now a form needs to be filled in once every 5 years
Download the “Confirmation of Diagnosis of Disability” ITRDD form from here:  57477_SARS_ITRDD  
Part A needs to be filled in by you, and part B needs to be filled in by a “duly registered medical practitioner specially trained to deal with the applicable disability” (like a child psychologist).
The form must not be submitted with your tax return but must be retained and only submitted to SARS on request.
image image image image image

From the Mental Health Act: “mental illness” means any disorder or disability of the mind, and includes any mental disease and any arrested or incomplete development of the mind, and “mentally ill” has a corresponding meaning;"

Claims can include: occupational therapy, speech therapy, medication, school fees (if your child attends a "special school" e.g. Vista Nova, Pro-Ed, Oakley House, etc.), transportation costs to take your child to the special school, tutor/facilitator fees, etc. Basically, any extra medical treatment or activities or supervision that will assist your child.
Note: school uniforms cannot be claimed (since those would have been needed even if your child wasn't handicapped).

The rule of thumb is "anything you would not have had to spend on an NeuroTypical dependent, is deductible".

Things do become hazy when you'd want to claim back for computer expenses, private schools, and so on. However, for anything that you have a supporting letter from a certified professional, you can claim. For example, if the OT writes a formal letter that the child should do horse riding, it is deductible. Without the letter, it is not.

Rule of thumb: if you can substantiate expenses that you would not have incurred if you didn't have a handicapped person in your family, then you can claim it. But when asked about claiming back cost of books, courses and conferences, there was some uncertainty. So these items seem to be a gray area.

Additionally, medical expenses for the whole family can be included in the total medical expenses – NOT just the medical expenses for the handicapped/disabled dependent.  I think SARS recognises that having a handicapped/disabled dependent in the family puts a lot of stresses on the whole family so they allow the whole family’s medical expenses to be deductible. 

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SARS efiling: What to do.... and where to find that field that will tell SARS how much you've spent on your dependant's medical expenses.

It's easiest to register for efiling: http://www.sarsefiling.co.za and submit your returns electronically.

Then fill in your Income Tax Return form (ITR12) online,
and on the section called "Medical Deductions" there’s a section that asks for the number of “members per month” MEDIF01.

{see screen shot image below}

Mark the ‘Y’ box next to “Are you, your spouse or any of your qualifying children a person with a disability?”
Mark the ‘Y’ box next to “If 'Yes', has this disability been confirmed by a duly registered medical practitioner as prescribed?”
{make sure that you have the SARS ITRDD form filled in a signed (as explained above)}


The relevant fields on the SARS eFiling forms are:

Field 4020: for any medical expenses not recovered from your medical scheme (other than physical impairment or disability expenses)
Field 4023: for any disability expenses not recovered from your medical scheme
(Note: on the 2012 eFiling form the field 4022 has been removed)

So, to get the numbers for those fields:
1. Figure A: Calculate ALL your medical expenses – the grand total of what you have had to spend for your whole family – including therapy fees, travel to and from therapy, special school fees over and above the “main stream” school fees, etc.
2. Figure B is the amount that is covered by your medical aid scheme – it should be on your medical aid’s certificate of cover.
3. Figure C is the amount that is not covered by your medical aid scheme – it should also be on your medical aid’s certificate of cover.
4. The total out of pocket medical expenses is then A-B
5. Field 4020: insert the figure C
6. Field 4023: insert the result of calculation: A-C : let’s call that figure D

So, as you can see, steps 1 through 6 result in the 2 figures that you need to put into those 2 fields (marked in red CCCCC and DDDDD):
image 
Once you are happy with your return's contents, then press the "File" button and it will be submitted to SARS for instant assessment.

If SARS want to query your submitted return then they will want to see proof of your expenses and the attached form.
I did my return 2 weeks ago – got an instantaneous assessment – within 5 seconds!  On screen, SMS and email all notified me almost immediately – and the refunded amount was in my account within 40 hours.

When reviewing your Assessment (IT34), take note that any amount representing a credit balance is followed by a minus (-) sign.... Look for a line that says "Balance of your account as on dd/mm/yyyy". If it says something like: "Due to you: 10,000.00 - " then start celebrating.... because this means that SARS are going to pay you R10,000 back.

The amount usually takes about 3 days to be transferred into your account.

If you are not happy with the assessment, then you have 30 business days from the date of the assessment to notify SARS in writing of your objection (providing reasons) - use the ADR1 form.

This, and more additional information is provided in the "Notes" section of the assessment form (IT34).

What is a deduction, and how much of my medical expenses can I hope to get back from SARS?
This is best explained by example: Let's say that you are taxed at 40% Once you've calculated the expenses that you've incurred for the Handicap that have not been covered by Medical Aid, let's say R10,000. Then R10,000 can be taken as a deduction which means you can expect to receive 40% of R10,000 = R4,000 back from SARS.

If you didn’t know about these deductions until now, then  it’s not too late - revised assessments can be done up to 3 years in the past (calculated from your date of assessment).

Good luck!

The original posting can be found here:
SARS eFiling: how to claim for handicapped medical expenses for Asperger’s or other Autism spectrum disorders

Other web sites with similar or additional information:
TaxTalk Blog: Tax and “disabilities” – ITR – DD day!
Personal Finance on iOL: Disabled not using all their tax breaks
Special Kids: Tax relief – Disability tax (Issue 12, Dec 2010)
Autism Western Cape - Plan for the future – Tax
Find an accountant - Tax “refund” season has begun for autism!

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