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).
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:
|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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