The “tax season” for the submission of 2010 tax returns began on 1 July 2010. It is with great pleasure that I am able to advise that Parents whose children suffer from Autism have already had substantial amounts of tax refunded to them. The tax refund season for taxpayer’s with “disabilities” within the family – such as autism, has thus well and truly also begun. SARS are urging taxpayers to submit their 2010 tax returns as soon as possible and not wait to deadline day. I would encourage Parents to do the same – the sooner tax returns are submitted it follows the sooner tax refunds will be paid. There are a lot of success stories regarding refunds having been paid and many more in the pipeline.
Notwithstanding this, a number of concerns have arisen lately regarding the extent to which Parents have not fully benefitted (if at all) in the past from the fact that they are able to obtain the maximum amount of refunds as a consequence of autism. SARS and The Treasury published statistics for the 2005 to the 2008 tax years. For those interested in reading the disturbing facts, visit www.bendelsconsulting.co.za and under “Press Box”, the relevant article is: “Tax Law and Medical Science – The Twain have Met!”. To provide a short summary, for the 2008 tax year only 20 407 taxpayers claimed their medical expenses under the “disability” code (that code included blind, deaf, wheel chair users, people who required artificial limbs and all “mental illnesses” (including autism, ADD/ADHD, depression, learning differences etc). Since autism figures affect approximately 1 in 110, the figure of only 20 407 taxpayers who claimed in 2008 would clearly suggest that many Parents who have children with autism have not claimed in the past.
In addition to the above disturbing facts, of the 20 407 taxpayers that did claim (there is no specific statistics regarding autism), the total amount of medical expense tax deductions claimed for the 2008 tax year was only R905 million. This figure would, therefore, imply an average claim of only R44 347 (this figure is not tax saved but the total amount of the medical expenses claimed which would include medical aid contributions, irrecoverable expenses plus expenditure incurred in consequence of the “disability”).
The majority of Parents with autistic children will bear testimony to the fact that these figures are out of all proportion to what the total expense should be and specialist tax law advice in this area is thus recommended. While each child’s case and medical interventions, schooling, therapy, etc differs, a specialist tax law advisor who deals with these cases on a daily basis is probably best placed to ensure that Parents maximize their claims for tax purposes.
Where taxpayers already have tax consultants, it is recommended that Parents ensure that full medical expense claims were made in the past. If claims where made Parents should confirm that they were fully maximized in the past (it is recommended, in the best interests of Parents, that such confirmations be obtained in writing, as the compelling evidence, in general, suggests otherwise. It has come to my attention that tax consultants are verbally stating that all claims have been made and maximized and it has subsequently transpired not to be the case) and that they will be for the 2010 tax year.
Often specialist tax law advice in this area is required. In every case that I have seen, either no claim was made at all or the actual claims made fell way short of what should have been claimed, in full and strict accordance with the law. To be sure, we are dealing with a complex and highly specialized area of tax law as it requires detailed knowledge of the tax laws and also medical issues related to autism. In every case that I am aware of the benefit of seeking specialist tax advice in this area has far outweighed the cost of obtaining the advice itself.
Where claims for prior-year’s have not been made, or fully maximized, it is open to taxpayers to object to those years (within certain time limits) and obtain tax refunds for the respective prior-years. In most cases, taxpayers can object to at least the 2007 to 2009 tax years (in other cases, we can object to tax years prior to 2007). In other words we are talking about tax refunds for at least 3 prior-years and the 2010 tax year.
For the 2010 tax year, there are new rules and SARS requirements in order to claim for the deduction of medical expenses under the “disability” provisions. Care should be taken to ensure that the correct procedures are followed and that claims are fully maximized. While each case needs to be based on its own facts and circumstances, experience shows that a refund of more than R50 000 is not unreasonable. And for four years, the refund can thus amount to over R200 000.
In summary, therefore, the fact that the historic figures are so low, implies that it is almost certain that not all claims for autism have been made in the past. Where claims have been made it is similarly clear that the amounts claimed have not been fully maximized. The statistics are in line with my experience of dealing with matters in this specialist area since February 2007.