Tax Credits Applicable to Individuals

Any individual earning income from employment, trade or investments which is taxable can claim tax credits which may reduce their chargeable tax.

What is the purpose of tax credits?

Credits are meant to reduce the tax payable and therefore increase disposable income for the taxpayer. Credits are designed for specific categories of taxpayers to address special social welfare needs such as expenses towards improvement or maintenance of health and/or the control of permanent physical, mental and visual disability.

Categories of Tax Credits

Mentally or Physically Disabled Persons’ Credit

• The credit for this category is US$900.00 per annum or $75.00 per month.
• The credit shall be deducted from the income tax with which the taxpayer is chargeable, where it is proved that the taxpayer is mentally or physically disabled to a substantial degree, but is not blind (a separate credit is available for blindness).
• The credit shall also be deducted from the Income Tax with which a taxpayer is chargeable in respect of each child of the taxpayer who is proved to be mentally or physically disabled to a substantial degree.
• To qualify, the person claiming the credit must have medical proof supplied by a specialist medical practitioner, of permanent substantial disability and apply for a written directive from their nearest ZIMRA office. Temporary disability such as is caused by injury due to an accident or illness for which rehabilitation or cure can reverse the condition does not qualify as disability for purposes of the credit.
• Mentally disabled persons who cannot personally attend to the requirements stated above can   be   assisted by a representative and in the case of applications by their employer.
• Any portion of the deductible credit which is not applied to reduce the chargeable tax for a married person can also be allowed as a deduction from the chargeable tax which his or her spouse is chargeable. This means that spouses can benefit from each other’s concessions.

In that case, both spouses should complete and submit separate returns for the relevant tax year so that the transfer of the credit can be facilitated, each person claiming the portion not claimed by the other.

To claim the disability credit, the taxpayer must have been ordinarily resident in Zimbabwe in the period of assessment.

Elderly Person`s Credit

• The credit for this category is US$900.00 or $75 per month.
• To qualify, the person claiming the credit must be aged 55 years or above prior to the commencement of the year of assessment. Where the assessment period is less than 12 months, the amount (credit) shall be reduced proportionately.
• The tax return should be accompanied by proof of the taxpayer’s age in the form of a birth certificate or national identification card showing the date of birth.

Blind Person`s Credit

• The credit for this category is US$900.00 or $75 per month.
• The credit shall be deducted from the income tax with which a taxpayer who is a blind person is chargeable. To qualify, the person claiming the credit must have medical proof supplied by a specialist medical practitioner, specifying the degree of his blindness.
• Taxpayer in this case, means any person in respect of whom an assessment is made in terms of the Taxes Act.
• The taxpayer should then apply for a directive at the nearest ZIMRA office for consideration by the employer.
• Any portion of the deductible credit which is not applied to reduce the chargeable tax for a married person can also be allowed as a deduction from the chargeable tax which his or her spouse is chargeable. This means that spouses can benefit from each other’s concessions.

In that case, both spouses should complete and submit separate returns for the relevant tax year so that the transfer of the credit can be facilitated, each person claiming the portion not claimed by the other.

Credit for the Cost of Purchasing Invalid Appliances

The credit for this category is 50% of the total cost of the appliance used by the taxpayer, his/her spouse or any of his/her children including step children and legally adopted children in respect of any of the following appliances:

• a wheelchair,
• any artificial limb, leg calipers or crutch; or
• any special fitting for the modification or adaptation of a motor vehicle, bed, bathroom or toilet to enable its use by a person suffering from a physical defect or disability; or
• spectacles or contact lenses

The taxpayer should submit evidence of such purchase and proof of the cost thereof for consideration to their employer or complete a return and attach evidence of such purchase and proof of the cost thereof.

Please note that this credit is open to residents of Zimbabwe only.

Medical Expenses Credit

The credit for this category is a total of 50% for ‘‘medical expenses” paid for.

These should be expenses incurred by the taxpayer and paid by him for services rendered to him/her, his/her spouse and minor children, including step children and legally adopted minor children and cannot be extended to anyone else.  A credit will not be allowed to the extent that the taxpayer is entitled to a refund or payment from any source whatsoever in connection with the expense (for example, a credit is not allowed where a refund is awarded by a medical aid society).

These medical expenses include expenses paid for the following:

• Services rendered by a medical or dental practitioner
• Drugs and medicines supplied on the prescription of a medical or dental practitioner
• Accommodation on admission, maintenance, nursing and treatment, including blood transfusions, X-ray and laboratory examinations and medical tests in a hospital, maternity-home, nursing-home, sanatorium, surgery, clinic or similar institution
• Transportation by ambulance, including an air ambulance
• Medical aid contributions to a medical aid society in respect of the taxpayer or his/her spouse or any minor children.

In claiming the credit, the taxpayer should attach evidence of the expenses claimed in their original forms.

To claim the medical expenses credit, the taxpayer must have been ordinarily resident in Zimbabwe in the period of assessment.

Example of Tax Credits application

Below is an example of the computation covering some credits. Note that taxpayers may claim a combination of applicable credits where they qualify, for example, one may be blind (blind person’s credit) and suffer a physical disability (disability credit), necessitating the use of an orthopedic appliance the cost of which may also be claimable as a credit.

Hypothetically, let us take the case of a qualifying elderly person (over 55 years) whose income is US$3000 per month and who contributes US$120 to NSSA and US$200 to a medical aid society. Injured in a road accident, he incurs medical expenses amounting to US$350 and purchases an artificial limb for $150 during the period of assessment to replace an amputated leg.

His chargeable tax for the month, accommodating the applicable credits, will be calculated as follows:

Calculation of Tax Due
Earnings			3,000
less: Allowable deductions- NSSA			120
Taxable Income			2,880
Tax There on (per tax tables)			585
Less Credits: Med Aid Contributions @ 50% of $ 200		100.00
Medical Expenses      @ 50%  of  $350		175.00
Purchase of artificial limb@ 50% of $150.00		75.00
Physical Disability Credit		75.00
Elderly Person’s Credit		75.00	500
Tax after credits			85
Add: Aids Levy @ 3%			2.55
Total payable			82.55

Please note that false claims will not only be disqualified, but constitute offences for which the taxpayer concerned may be penalised and/or prosecuted.

Our valued clients are reminded that the Value Added Tax for the month of March 2018 is due on or before 25 April 2018. Our clients are also reminded to take advantage of the TAX AMNESTY that is closing on 30 June 2018.

Disclaimer This article was compiled by the Zimbabwe Revenue Authority for information purposes only