Tax Relief

U-turn in tax relief for disabled schooling entitlements is mostly welcomed

A massive outcry from civil society, parents and educators about taxpayers’ ability to claim relief for costs related to education for the disabled has resulted in the South African Tax Administration (Sars) taking a complete turnaround.

Harmful changes in 2020 and also this year, which would have made it impossible for many parents to be able to afford special education for their physically handicapped or handicapped children, have now been thrown out the window.

Read:

Sars wants to limit tax relief for disability costs Sars withdraws changed list for chargeable disability costs

Sars said in a statement that “after much deliberation” it had been decided to use the method for calculating the qualifying medical costs for school fees, as set out in the 2012 list of disabled people.

Sharon Smulders, Project Director of Tax Advocacy at the South African Institute of Chartered Accountants (Saica), says this is a “welcome change” – but one that should never have happened in the first place.

“It’s a good start, but we hope the discussions to improve the lives of the children and their parents don’t end.”

Keith Engel, CEO of the South African Institute of Taxation (Sait), also believes that the revised position of Sars “overwhelmingly” is seen as a welcome change.

The difficulty for Sars is that although legislation may require a theoretically purer one Approach it should as a matter of fact better identify the needs of disabled children in an area where public support is largely lacking.

Read: Some people have not received a disability allowance since the beginning of the year

The list of eligible expenses in special schools now includes school assistant or classroom costs and tuition fees, the latter being limited to the amount that exceeds what would have been paid if the person were to attend the nearest non-specialty paid public school would have for learners with special educational needs.

It also includes schools that do not specialize in providing learners with special educational needs, limited to additional expenses incurred and paid for due to the disability.

The changes

The first attack occurred in 2020 when parents were limited to the cost difference between a private special school and a paid private non-special school – and not to a paid public non-special school.

In 2021, after very little consultation, the list was changed again. In the draft list, school fees were deleted as a qualifying expense. Sars argued that school fees are not a result of disability, but a result of education.

She then requested that a “single list” of the nature and cost of each activity, including school fees, be included on the invoice or in a cover letter issued by the school.

The outcry

The 2020 changes sparked widespread condemnation, but the 2021 changes sparked a public outcry, with 11,600 people signing a petition against them in less than 10 days. Shortly thereafter, the draft of the 2021 list was withdrawn.

The return to the method of calculating the eligible medical expenses for school fees in the 2012 Disabled List means that the 2020 changes and the proposed 2021 changes will no longer be in effect.

This calculation method applies retrospectively from March 1, 2020.

Craig Miller, tax director at Webber Wentzel, says common sense has prevailed. “It seems that Sars got a feel for what the achievement means for people who need to look after physically challenged or disabled children.”

Sars had the opportunity to reflect on the comments and the exchange with parents, special schools and specialists. Everyone is better off now, he says.

Get relief

According to Smulders, many parents have already filed their tax returns for 2021 in which they will most likely not receive any tax breaks.

She advises them to submit a correction request to include their expenses.

If this option is no longer available, you must file an objection.

“This process can be time consuming and some taxpayers may even need to seek assistance with the process as they have never been in this situation before.”

Taxpayers have 30 days from the assessment to file an objection, but Sars has no time limit to respond. Smulders hopes Sars will prioritize that.

The payment of refunds has been identified as a systemic problem and there are concerns that it will get its ugly head on claims for disability expenses.

“We very much hope that Sars will speed up appeals and reimbursement so that parents can pay school fees,” says Smulders.

She reiterated her concern about the Sars commissioner’s discretion as to what is tax deductible and what is not.

Saica believes this delegation is unconstitutional and invalid (as is the list of qualifying expenses required under this delegation).

“Only parliament is allowed to raise taxes in accordance with the constitution,” she says.

Saica has expressed hope that Sars will support his efforts to bring the legislation within the scope of the constitution.

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