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Sars wants to limit tax relief for disabled costs

Sars argues in the document that school fees are not in the consequence of a disability.
Image: Shutterstock

The South African Revenue Service’s (Sars) continued attack on the ability of taxpayers to claim tax relief for the education costs of the disabled has been described as “mean and disrespectful”.

School fees as a qualifying expense have been removed in the recent draft response document on the list of qualifying physical impairment or disability expenditure. This is the latest curveball thrown at parents of disabled children to ostensibly “curb abuse” and prevent discrimination against parents with abled children.

Sars argues in the document that school fees are not in the consequence of a disability but in consequence of education. Therefore, school fees will no longer qualify as a medical expense.

Craig Miller, tax director at Webber Wentzel, says this is a very simplistic way of looking at it. There is a reason for the existence of special needs schools.

Special needs children cannot survive in a mainstream environment and the government has not provided any viable alternatives, he says.

Disability interventions

“The special needs school creates the structure from where the different therapies can be administered in order for the children to develop, as mainstream schools typically do not have the infrastructure. These schools often operate on the premise that the school fees cover the therapies offered at the school.”

Last year parents received the first blow when school fees for private and public special education needs schools were limited to the amount in excess of fees at their closest fee paying private or public schools.

In terms of the proposed new rules, the parent must separately list the cost of “interventions” at the school “in consequence” of the disability. This includes among others, a care worker assisting a child, a social worker or psychologist, occupational therapist, physiotherapist, or audiologist assisting the learner.

“It (Sars) wants you to itemise every [separate] therapy which is provided at the school. It is really difficult to see how this will work in practice.”

Unfair comparisons

When Sars started with its attack on relief for school fees for disabled or impaired learners it argued that it would be unfair to parents of those children who do not have a disability.

“Parents of disabled children do not simply send their kids to special needs private schools because they think it is a nice thing to do. It is a necessity,” remarks Miller.

Kyle Mandy, tax technical and policy director at PwC, says the reason learners with disabilities go to special needs schools is precisely because they have a disability. The link with the disability is therefore obvious.

Special needs school fees could never be claimed in full. It has been limited to the extent to which such school fees exceed those of ordinary schools.

“Inevitably this will be the case because (even without the interventions on the Sars list) costs are higher due to the need for smaller classes and specialist teaching skills,” says Mandy.

“It is therefore wrong to say that these additional costs are not in consequence of a disability.”

Miller adds that the education of a child going to a mainstream school, who then matriculates and decides which university to attend, can surely not be compared to the education of a severely autistic child.

“These special needs schools deal with integrated therapies and responses for disabled children. It is a known fact that the state cannot provide these services,” says Miller.

Beatrie Gouws, head of the South African Institute of Taxation, agrees. The Constitution provides that everyone has the right to a basic education, including adult basic education, and to further education, which the state through reasonable measures, must make progressively available and accessible.

“Where a disability affects a child’s ability to access education, the policy has been to bridge that gap with the tax relief provided, so that the child’s access can be restored,” says Gouws.

“By discounting the value of this basic right, their future livelihood, happiness, and the contribution that these children may make to our society and economy, is dealt a severe blow.”

The formula

Miller explains that Sars is using a formula – depending on the expenditure – to calculate the tax credit. The taxpayer could claim a percentage of the disability expenditure as a credit to the total tax liability.

For example, if the parent earned R100 000 per annum, with a tax liability of R20 000 a year, and school fees of R10 000 a year the parent was allowed to claim one-third of the medical expenses (33%) which could be offset against the tax liability. (R20 000 minus R3 333).

There are many parents who rely heavily on this relief. When the first round of changes was introduced Sars ignored the most heart-rending submissions by parents affected by the changes.

One parent, with a severely autistic daughter, said it left a bad taste in her mouth for Sars to think that parents of special needs children were abusing the system.

“It is difficult enough to be a parent of a special needs child and for Sars to redraft the qualifying list of expenses limiting the expenditure is disrespectful and demeaning.”

It appears that Sars considers parents wanting to give their special needs children the best possible treatment in private schools – when there is no other alternative – to be “abusive”, another parent said.

Miller says he cannot imagine that the latest change will result in a material revenue gain to the fiscus. In fact, if Sars focused their energies on a few other things they may find that this is small change in terms of tax collection.

“This new amendment is particularly surprising given that Sars has recently amended the treatment of school fees. Now it is changing [the guidelines] again and people have not been given proper notice.”

Affected parties have until May 31 to respond.

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All the better to channel money to the able bodied voters that do not even want to work !!

Bring back the Stolen Tax Payer Money from Dubai and Pakistan.
Plus sell the mansion in Dubai.

But SARS refuses to listen or is too scared to do anything about it.

“ It (Sars) wants you to itemise every [separate] therapy which is provided at the school. It is really difficult to see how this will work in practice.”

As I read the proposal, it is the school that would itemise. Who better placed to do so?

Not so. Most of these schools have personalised plans for each learner. Let’s say the child is dyslexic, he/she will have extra attention placed on reading and writing for example, whilst not needing specific attention to something like maths.

This is all part of the school fees – how is the school expected to itemise this and put a value on that?

Absolutely. So if the school fees are R3000 per month, itemize each and every class as therapy on the parents’ bills, totalling up to R2999.

A special needs school principal called into 702 to explain how IMPOSSIBLE this would be.

All agreed SARS has no clue even about what special needs are!

SARS has no clue about anything.

The rudest word I know popped into my head re SARS. They are the muscle to the ANC’s kleptocadre’s. I am now an active tax-evader. Come and pull those ZAR out of my dead hands …

I’m with you, Pamplona. I bet you my rudest word is worse than yours. To add insult to injury when I drive from ORT to Pretoria there is this huge SARS billboard along the highway urging me to do my duty by paying my tax. And thanking me at the same time. It’s gotten so bad my wife refuses to sit in the car with me along that stretch of road.

DON’T pay tax! Ever! Do all business in cash only!

SARS is for certain going to shut down tax credits for medical aid contributions and that extra deduction of expenses not covered by the medical aid.

I did not think they would go for the disabled first, that’s mean and will anyway yield peanuts.

Tip for SARS : tax the use of trust assets as a fringe benefit. Tens of billions right there. It blows my mind that R100,000 distribution from a trust is taxable income for Johnny, but Johnny living rent-free in the trust owned Clifton apartment has no tax consequence.

It’s MORE than mean; it’s uncivilized!

ALL school fees – public and private – should be a tax-deductible item, up to a certain sum, because the state does not provide the service that you pay for with tax. You have to prop it up from your nett income.

SARS disgusts me.

SARS, here is a great idea for you to improve tax income – every thief (including all types of theft) that is found guilty in court, should pay a pre-determined portion of tax, based on the value of the (illegitimate) income (let’s say 40%) that is not retrieved. So, if I steal R100 and the police/authorities are only able to get R20 back from me, SARS demands R32 (since I have spent the R80, it is regarded as income). In our lovely country you will very quickly generate a huge income stream from this…

As a parent of a disabled son (brain damage from a car accident in the 90’s) the very last thing on our mind is trying to “do SARS in” with the few thousand we spend at his special needs school.
Having actually seen first hand what the Govt does for special needs children and adults in New Zealand I can only say that SARS is the most disgusting and disturbing institution I have ever had to deal with. If only I was a bit younger I would have packed up and left this Sh#$%Hole a long time ago!
My son is 29 but has the intellect of a 10 year through absolutely NO FAULT of his own (he was only 18 months old at the time of the accident). He is unable to make a meaningful contribution to society but is now detrimented and discriminated against able bodied children/adults. Sickening.

That is the story of SA, because of a few ( or not so few? ) corrupt abusers the innocent must suffer! SAaaars is the long fingers of the govment!

G-d bless you, Gil. And your family. Sincerely.

Thank you. To be honest our primary focus is for his future well being and trying to prepare long term is somewhat diabolical in SA – let alone trying to scheme how to screw SARS out of a few thousand. Our monthly costs are quite substantial but it is our choice to give our son the best we can afford – SARS or no SARS.
In fact I am just gonna forget the SARS relief as I am gatvol of their constant auditing of my returns year after year.

Kieswetter ( I dont have respect for you and the ANC organisation you belong to….same goes for Pravin Gordhan)…

Why dont you go after the politicians that have stolen BILLIONS in this country SA?

You have done nothing so far!

How does one spell it out to them?

South African Tax Payer money is in DUBAI and PAKISTAN.

The ex President has a mansion in Dubai. Is that not illegal???

sars do have special needs

Absolutely disgusting Edward Kieswetter…

Parents of disabled children (also as adults) have numerous expenses apart from education. Social support systems in SA are non existent. Parents must make provision for their children as adults and every cent helps.

In the absence of viable alternatives, this is outright disrespectful and mean to parents of children with disabilities.

Exactly! What alternatives has this government provided?
Same as insufficient hospitals, schools, rehabs – insufficient or non-existent everything plus potholes in abundance!

The war should be against the shocking abuse of taxes by Government and others. It seems ordinary workers and businesses – except the gangster-ridden taxi industry – should be accountable yet those that consistently waste taxpayer funds not. A tax boycott is the ONLY way to bring fairness back to this abusive system.

My Autistic son is 34 years but always remains a “child”, because he requires 24/7/365 days attention. It is only when you have a disabled child will you understand the debilitating effect on the life of the parents. It is pathetic that yet another “need” of disabled children in South Africa is being eroded. Disabled children that are over 21years are treated the same as any other adult viz: no medical-aid advantage; no consideration at government parks and recreation centres; no benefits in shopping malls; no benefits in government institutions (home affairs, licensing, hospitals ). Disabled persons are given the same (in)consideration as abled persons. SA is big on policy formulation and pathetic on implementation and compassion. Well done! Mr Kieswetter “steal from the needy” citizens to give to the “corrupt” citizens.
PS: I have never claimed a cent for educational purpose of my Autistic son.

Our awesome friends, both teachers, “lost” their brilliant son through a drunk driver 11 years ago. He suffered severe brain damage and, although functional, will never be independent. They spent their life savings in the hope of giving him his normal life back. To no avail. Kieswetter and his team are despicable, targeting the hurt and vulnerable. Prosecute a high level politician, SARS, and stop stomping on the vulnerable.

My friend has a 40-year old mentally challenged daughter since birth – you’re so right about how it is debilitating for the parents; my friend is well over 60 with cronic back problems but can’t retire partly due to the cost of the daughter attending a special needs facility during the week.

SARS and Kieswatter are sickening!

Inhumane, please have a heart SARS.

Paying tax in South Africa is probably the biggest con-job of all time.

Careful now. As soon as you say something negative about SARS or this 3rd world country, you are branded a racist.

Interesting take. I would prefer to see more outrage from society about tax issues such as the fact that the R100bn taxi industry pays just R5m in taxes. I suppose just removing yourself (a la taxi industry) from the tax system is better than participating in the system but criticizing it at the same time.

This has just been under the spotlight on 702 late afternoon radio show.

Parents of children with special needs like cerebral palsy, and other disabilities, special needs schools as well as tax practitioners specializing in disability tax, all called in. But SARS, not surprisingly, wasn’t available to “face the nation.”

As one father of a mentally challenged 11year old son said: government is cash strapped but the day that a country strips the little protection afforded to the weakest in society, (current tax rebate), it’s a sad day indeed!

A tax practitioner caller said SARS is motivated by a fear/suspicion that this is privileged private education . All callers pointed out that government completely failed to provide special needs schools and the actual cost of running a school like this where no more than 5 children can be accomodated in a class. Also the fact that schools for normal children are not interested in, or equipped, to deal with these handicapped children. In some cases children of 12 still need nappies – others have to be taught basic skills of how to wash hands – let alone being able to write or read, in some cases.

Kieswatter can forget about building trust among tax payers…..
The little he can make from scrapping this sensitive rebate (can’t be much) shows Kieswatter’s (and the ANCs) ruthlessness towards the weak in society!

End of comments.

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