Introductory: In terms of section 18 (1) (d) of the Income Tax Act, the living-in expenses; electricity; food and water incurred and paid by the taxpayer iro the care attendant are tax deductible by the taxpayer, if the aggregate amount of such expenses d
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
The issue is no longer dealt with in section 18 of the Income Tax Act, but it may be much the same.
For the purposes of section 6B of the Income Tax Act, 'qualifying medical expenses' means … any expenditure that is prescribed by the Commissioner (other than expenditure recoverable by a person or his or her spouse) necessarily incurred and paid by the person during the year of assessment in consequence of any physical impairment or disability suffered by the person or any dependant of the person. See paragraph (c) of the definition in section 6B(1).
The emphasis, relevant to your request, is on the phrase “expenditure that is prescribed by the Commissioner”. SARS prescribed the expenses in their Guide on the Determination of Medical Tax Credits (Issue 9) – you have referred to an older version thereof.
Under the heading “personal attendant care expenses”, the following is stated:
“Expenditure that is incurred and paid for purposes of special care, for special services to assist, guide, care for a person with a physical impairment or disability, regardless of the place the services are rendered (for example home, nursing home, retirement home etc.).
Examples of expenditure in this category include nursing services, special care for a person with a disability etc.
This will include salaries paid to care attendants, agency fees if the care attendant is provided by an agency as well as fees for professional services performed by, for example, nursing homes.”
Under exclusions, under the example under the same heading, the following is stated:
“… any other living-in expenses other than food, electricity and water for a care attendant. For example, the taxpayer cannot claim for the space (for example room) used by the person with a disability in the house.”
Under the examples, with respect to “actual living-in expenses”:
“Electricity, food and water incurred and paid by the taxpayer for the care attendant. SARS would generally allow the living-in expenses incurred and paid by the taxpayer, if the aggregate amount of such expenses does not exceed 10% of the annual salary payable to a care attendant up to a limit of 50% of the annual domestic worker minimum wage under Area A of the Sectoral Determination 7 for Domestic Workers (currently R18 076.08).”
The SARS guide doesn’t give any guidance on the method to be used to determine the expenses, where it is a portion of the expenses incurred that relate to the attendant only.
We suggest that you actually obtain a ruling or non-binding private opinion from SARS, but an apportionment of the domestic expenses, probably based on the floor space used, may well be an appropriate method of determining the attributable expenses. The principle at law is that an apportionment must be reasonable.