Is Stem Cell Bank Fees (storing of babies stem cells) tax deductible under medical expenses paid self? Code 4020
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
We need to remind you that the service offered by us is limited to guidance only.
The issue is whether or not it is qualifying medical expenses as defined in section 6B. We accept that, if he was a member of a medical scheme it may not have been covered. This may be because this is something which is elective and not usually covered by medical schemes. It may also not qualify as a “relevant health service” in terms of the definition in the Medical Schemes Act, 1998. The Income Tax Act, however, doesn’t refer to this.
The section 6B(1)(a)(i) requirement is that it must be “amounts … paid by the person … to any duly registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopedist for professional services rendered or medicines supplied to the taxpayer…” The subsection doesn’t, as with nursing or a nurse (in item (ii)), refer to illness or confinement. The item (i) expenses are also not further qualified as is for instance expenses in consequence of any physical impairment or disability suffered by the taxpayer – there the expenses must be prescribed by SARS.
The only requirements then seem to be that it is paid to a duly registered person (mentioned in the section) and that it must be for professional services rendered. We submit that duly registered refers to registered with the Health Professions Council of South Africa – see SARS’s guide on the determination of medical tax credits and allowances.
No guidance is given on the meaning of professional services rendered and the phrase must take its ordinary meaning. The Health Professions Act, 1974, refers to a person practicing “any health profession the practice of which mainly consists of -
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the physical or mental examination of persons;
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the diagnosis, treatment or prevention of physical or mental defects, illnesses or deficiencies in man humankind;
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the giving of advice in regard to such defects, illnesses or deficiencies; or
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the prescribing or providing of medicine in connection with such defects, illnesses or deficiencies…”
As the taxpayer would bear the onus of proof if the claim is disputed (it could well be that SARS’s view may be that it is not qualifying medical expenses) it is suggested that you provide the client with a tax opinion or obtain one from SARS.