Medical Aid Tax Deductions in South Africa
January 9, 2017
To improve the tax system, the medical tax credit system (MTC) has gradually replaced the medical aid tax deductions system in South Africa. In fact, it was in March 2014 that medical aid contributions fell within the tax credit system.
An Additional non-refundable Medical Scheme Fees Tax Credit is a discount which reduces the regular tax a person pays. This rebate can’t go over to the next year, and it is a discount given in addition to the medical tax credit
Out-of-Pocket expenses not claimed for during the year of assessment –
- Hospitalisation in registered hospital
- medical expenses outside of South Africa
- services and medicines by a registered medical practitioner
- home nursing by a registered medical person or nursing agency
- any costs prescribed as a result of any physical disability
There are two types of medical expenses which qualify for a medical tax credit –
- Medical aid contributions – Section 6A – Medical scheme contributions tax credit
- qualifying out-of-pocket medical expenses -Section 6B – Additional medical expenses tax credit
That may sound like hogwash to many South Africans. It’s why so many people turn to experts to help them plough through all the jargon. Many South Africans haven’t got a clue how to complete their annual tax returns and they end up being losers and even incurring penalties!
There are certain expenses that a taxpayer can claim from SARS, and one of these is medical aid deductions. Before the medical tax credit system, there was much frustration and confusion. The medical tax credit is a monthly tax credit off from your personal payable tax. By applying the medical tax credit system, the SARS wants to bring about more fairness amongst all income groups with medical expenses.
Medical Deductions are Equal, Medical Aid Tax Deductions
Some time ago, taxpayers with higher monthly medical aid contributions enjoyed a larger tax deduction. Now, with the medical tax credit system, SARS medical aid deductions are equal, regardless of the taxpayers’ monthly medical aid premium.
When you’re older than 65
The medical tax credit doesn’t apply to South African citizens who are older than 65 years of age and older. Their medical aid contributions are tax deductible in full. As a senior, their entire monthly medical aid contribution is deductible and not just a portion of it. For those younger than 65 years of age, the medical tax credit is a monthly amount.
While the tax credit is for each dependent, the overall tax deductible amount per taxpayer will vary according to a person’s dependents. The more you have, the higher your medical tax credit will be.
The monthly medical tax credit for 2017 is set at R286 for the main member, R286 for the first dependent and R192 for every other dependent.
If you and your dependents belong to a medical aid in South Africa. you’ll currently get R270 in 2016 medical tax credit for the first two members. The amount is off your tax payable. That differs from the previous system where costs were deducted against income.
Get Help with Medical Aid Tax Deductions
Personal tax is forever changing, so it is up to each taxpayer to keep up to date with changes. If you need help, call the SARS Contact Centre. Their number is 0800 00 SARS (7277). You can also visit your nearest SARS branch.
All info was correct at time of publishing