Financial Planning

There have been several findings and changes to our law relating to the deductibility of medical expenses over the past few years.  The changes will be of benefit to many women, who suffer from medical related “illnesses”.

The main change to the law has been the introduction, with effect from 1 March 2009 (i.e. for the 2010 tax year), of a new definition of “disability” – it replaced the old definition of “handicapped person”.  The definition of a “disability’ is in most cases much wider than that of the “handicapped person” definition.

Broadly, a “disability” is defined as a moderate to severe limitation of a person’s limitation to perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment, if the limitation has lasted or has a prognosis of lasting more than one year and is diagnosed by a registered general practitioner.

The relevance of the definition of a disability in tax law is if the taxpayer, his or her spouse, or child or children suffers from a “disability” then all irrecoverable medical expenses of the whole family paid by the taxpayer can be deducted for tax purposes.  Such expenses would include all medical aid contributions and all irrecoverable doctors, dental, hospital, gynecological expenses etc.  Additionally, all expenses necessarily paid in consequence of a disability or physical impairment are deductible – for example, costs of obtaining assistance where a women suffering with post-natal depression is unable to look after her family.

Because of the law changes it is likely that several women related illnesses are now included and thus can have a substantial financial benefit.

The list is extensive and women are encouraged to seek specialist tax advice as to whether their particular illness and expenses qualify under the new tax laws.

The list of potential women related illnesses now covered by the “disability” provision is substantial.  To list a few illnesses that may qualify are as follows:

Infertility
It is considered that infertility is likely to be considered as a “disability” within the definition in our law.  It is understood that an infertility diagnosis is made after a failure to conceive for one year or more.  In view of this, the duration test in the definition should be able to be met. It is also likely that the infertility would have had, or will have an effect on the women’s ability to function or perform daily activities.  

Examples of this would be distractions due to frequent visits to doctors, time off work and stress related issues.  Because the cost of receiving fertility treatment can be substantial, the tax savings in relation to this can be significant.  Each case will need to be based on its own merits and it should not be assumed that infertility in itself will mean that the definition is met.

Cancers
It is submitted that female related cancers e.g. breast cancer should fall within the definition of “disability”.

Post-natal depression
Since depression is a mental illness as defined, post-natal depression should also fall within the definition of “disability”.  That is provided the functionality and duration tests are met which and diagnosed by a medical fractioned e.g. GP or

Psychiatrist.

Children with “disabilities”
The costs of raising children with “disabilities” such as autism, aspergers syndrome, learning difficulties, ADD, ADHD can be difficult and expensive as often extra domestic help is needed to care for the children.  All these and many more illnesses are regarded as mental illnesses within our law and provided duration, functionality and diagnosis tests are met, the child should be regarded as “disabled” within the definition.  Such “disability” would allow the family to deduct all its medical expenses, including all related assistance (remedial school fees, special school fees, domestic help etc.)

The law relating to the deduction of medical expenses (unlike the general rule in our law) allows for personal and domestic expenses to be deductible.  The requirement is that the expenses are paid to a registered medical practioner (and not recovered from a medical scheme).  Since a plastic surgeon is a medical practioner it is arguable that elective surgery can be deductible – there does not appear to be anything in our law which would prevent the deduction of plastic surgery (all other requirements being met).  Further consideration should be given to this before assuming costs will be allowable.
In summary, there a number of women related illnesses which will, because of the change in our law, now mean that taxpayer’s will be allowed to deduct all their irrecoverable medical expenses of the whole family.

You can contact Eugene Bendell LLM (TAX LAW) at: ebendel@bendelsconsulting.co.za or 021 526 0444