MEDICAL SCHEME FEES TAX CREDIT
What is it?
A Medical Scheme Fees Tax Credit (also known as an “MTC”) 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
. It applies for years of assessment starting on or after 1 March 2012 (from the 2013 year of assessment).
Who is it for?
The MTC 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).
This MTC seeks to bring about greater fairness and help achieve greater equality in the treatment of medical expenses across all income groups.
The MTC is a fixed monthly amount which increases according to the number of dependants:
|R286 per month for the taxpayer who paid the medical scheme contributions
||R303 per month for the taxpayer who paid the medical scheme contributions|
|R286 per month for the first dependant
||R303 per month for the first dependant|
|R192 per month for each additional dependant(s)
||R204 per month for each additional dependant(s)|
How does it work?
The MTC will effectively 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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