MEDICAL SCHEME FEES TAX CREDIT

What is it?

Medical Scheme Fees Tax Credit is a rebate which reduces the normal tax a person pays. This rebate is non-refundable and can’t be carried over to the next year of assessment. In other words, this rebate will cut your normal tax to a lesser amount or nil, however it can’t create a negative amount. It applies for years of assessment starting on or after 1 March 2012 (from the 2013 year of assessment).
 

Who is it for?

The Medical Scheme Fees Tax Credit effectively replaced part of the tax deduction that was  specifically allowed for medical scheme contributions, and applies to fees paid by a taxpayer to a registered medical scheme (or similar registered scheme outside South Africa) for that taxpayer and his/her dependants (as defined in the Medical Schemes Act).
 
Although the Medical Scheme Fees Tax Credit was introduced from 1 March 2012, it didn't affect all categories of taxpayers at once. There are two different start dates depending on the age of the taxpayer:
 
  • Taxpayers younger than 65 – converted to the Medical Tax Credit from 1 March 2012.
  • Taxpayers 65 and older  – converted to the Medical Tax Credit from 1 March 2014.
 
This Medical Scheme Fees  Tax Credit seeks to bring about greater fairness and help achieve greater equality in the treatment of medical expenses across all income groups.
 
The Medical Scheme Fees Tax Credit is a fixed monthly amount which increases according to the number of dependants:
 

2015/2016 year of assessment

(1 March 2015 - 29 February 2016)

2016/2017 year of assessment

(1 March 2016 - 28 February 2017)

​​R270 per month for the taxpayer who paid the medical scheme contributions R286 per month for the taxpayer who paid the medical scheme contributions
​R270 per month for the first dependant R286 per month for the first dependant
​​​​​​R181 per month for each additional dependant(s) R192  per month for each additional dependant(s)
 

How does it work?

Medical Scheme Fees Tax Credit will impact both the employer and the employee. This credit must be taken into account by the employer when calculating the amount of Employees’ Tax to be deducted from the employees’ remuneration.
 
 
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Last Updated: 24/02/2016 2:09 PM     print this page
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 Top FAQs

What is "deemed medical contributions"?
Medical contributions paid by an employer for an employee to a registered medical scheme which will result in a taxable benefit for the employee. This fringe benefit will be "deemed contributions" for the employee

Why has there been a change from medical tax deductions to medical tax credits?
The system of tax credits is fairer. All taxpayers, regardless of income, derive an equal tax benefit because tax credit amounts are fixed.

What is the difference between a medical tax credit and a tax deduction?
A tax deduction lowers the tax payable by reducing taxable income. A tax credit reduces the amount of tax to be paid by subtracting the tax credit from the tax payable.

How will taxpayers older than 65 years be affected by the new medical tax credits?
The medical tax credit does not affect a person who is 65 years or older as they can deduct the full amount of their medical scheme contributions.