Evaluation of the completeness of the 2010 list of qualifying disability expenditure : an exploratory study

Abstract

A disabled taxpayer, or a taxpayer caring for a disabled spouse or child, may deduct 100% of disability expenses from taxable income (section 18(2)(b) of the Income Tax Act No. 58 of 1962). For a 2010 year of assessment, disability expenses must meet the following three requirements to be deductible:  The expense should appear on the prescribed list.  It should have been necessarily incurred and paid for (and not recoverable) by the taxpayer.  It should have been incurred in consequence of any physical disability suffered by the taxpayer, his or her spouse or child, or any dependant of the taxpayer. If compared to a 2009 year of assessment, the second and third requirements remained the same. However, the prescribed list only became effective as from 1 March 2009 (i.e. as from the 2010 year of assessment). According to the discussion paper issued by SARS, the prescribed list was introduced to bring clarity as to the type of expenses that qualify and not to add another requirement. The expectation therefore arises that ALL expenses that meet the second and third requirements will appear on the prescribed list. The study explored the possible existence of an expense which had been necessarily incurred and paid by a South African taxpayer during his or her 2010 tax year in consequence of his or her disabled child, but which does not appear on the prescribed list. Data was collected by the researcher by using a questionnaire when having semistructured telephonic interviews with parents of severely disabled children. The results of the study indicate that there were indeed legitimate expenses incurred by the respondents during their 2010 year of assessment that did not appear on the prescribed list. The prescribed list therefore does not cater for all the possible legitimate expenses incurred by the parent of a severely disabled child.