Does a non-resident person over 65 qualify for a medical deduction?
01 July 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
The answer to this query is based on legislation as at 01/07/2014.
Q: Does a Non Resident
Taxpayer over 65 get the medical deduction?
A: Our guidance assumes that
with "non resident taxpayer” you mean that the taxpayer is deemed to be a
resident only of Australia – refer to article 4(3) (in the protocol). We
are not certain why the capital why it is believed that the capital gain on the
sale of the shares is a taxable one. We assume the listed shares are the
ones envisaged in paragraph 2(2) of the Eighth Schedule. We are aware
that article 13(5) gives sole taxing rights to the RSA, but submit that it does
not apply – article 13(4) deals with the paragraph 2(2) assets.
Please note that the taxable
income would not include the dividends.
We agree that the taxpayer
will be entitled to make the section 18 deductions.
In SARS’s Interpretation Note
18 (we referred to issue 2 and not the draft one) it is explained as follows:
In determining the taxable
income derived from foreign and South African sources respectively, any
deductions sought under the following sections must be apportioned on a pro
rata basis between taxable income derived from local and foreign sources before
taking into account the relevant deductions:
- 11(n) (retirement annuity
- 18 (medical and dental expenses), and
- 18A (donations to certain
(Paragraph (i) of the proviso
to section 6quat(1B)(a)).
As a result of taxable income
including a taxable capital gain, any deduction under sections 18(2)(c)(ii) and
18A respectively must be calculated by taking into account any taxable capital
gain forming part of taxable income.
Whilst it is not applicable
to the question raised, it confirms that the deduction can be made.