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 any portion that is not allowed in the current year 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 or 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:

2018/2019 year of assessment (1 March 2018 - 28 February 2019)	2019/2020 year of assessment (1 March 2019 - 29 February 2020)
R310 per month for the taxpayer who paid the medical scheme contributions	R310 per month for the taxpayer who paid the medical scheme contributions
R310 per month for the first dependant	R310 per month for the first dependant
R209 per month for each additional dependant(s)	R209 per month for each additional dependant(s)

See more tax rates here.

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.

Individuals who have not had their MTC taken into account by an employer (for example, an individual who is retired and receives a pension; or an individual who is self-employed) can claim the MTC on assessment by submission of an annual income tax return.

See more information on claiming medical expenses (Additional Medical Expenses Tax Credit). Also refer to the Guide on the Determination of Medical Tax Credits.

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Top Publications

List of Qualifying Physical Impairment or Disability Expenditure

Guide on the determination of medical tax credits

Last Updated: 20/02/2019 2:11 PM

Top FAQs

What is "deemed medical contributions"?

Medical contributions paid by an employer for the benefit of an employee to a registered medical scheme will result in a taxable benefit in the hands of the employee. Although regarded as a fringe benefit (and thus gross income),

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 their level of income, derive an equal tax benefit because tax credits are fixed and are deductible against the normal tax payable, as opposed to simply reducing the taxable income.

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.