MEDICAL SCHEME FEES TAX CREDIT

What is it?

A Medical Scheme Fees Tax Credit (also known as an “MTC”) is a rebate which, in itself, is non-refundable, but which is used to reduce the normal tax a person pays. Any portion that is not allowed in the current year (usually that amount which exceeds the normal tax payable) can’t be carried over to the next year of assessment. The MTC applies for years of assessment starting on or after 1 March 2012 (from the 2013 year of assessment).

Who is it for?

The MTC applies to fees paid by a taxpayer to a registered medical scheme (or similar fund outside South Africa) for that taxpayer and any "dependants" (as defined in section 6B(1) of the Income Tax Act, 1962).

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; or for a member or dependant of a medical scheme or fund where the taxpayer him- or herself is not a member of a medical scheme or fund.	R310 per month for the taxpayer who paid the medical scheme contributions or; for a member or dependant of a medical scheme or fund where the taxpayer him- or herself is not a member of a medical scheme or fund.
R620 per month for the taxpayer and one dependant; or R620 in respect of two dependants where the taxpayer him- or herself is not a member of a medical scheme or fund.	R620 per month for the taxpayer and one dependant; or R620 in respect of two dependants where the taxpayer him- or herself is not a member of a medical scheme or fund.
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 or withheld 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.

In addition to the MTC, an individual may also claim an Additional Medical Expenses Tax Credit for certain qualifying medical expenses, subject to limitation. See more information on claiming these medical expenses (Additional Medical Expenses Tax Credit). Also refer to the Guide on the Determination of Medical Tax Credits for further information.

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Top Publications

List of Qualifying Physical Impairment or Disability Expenditure

Guide on the determination of medical tax credits

Last Updated: 14/08/2019 2:00 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.

I pay contributions to a medical scheme but the medical tax certificate is not in my name and I have been selected for audit. Which supporting documents must I submit?

You need to submit an affidavit stating that the main member is a dependant as defined (that is, either your spouse; a child (or spouse’s child); any family member in respect of whom you are liable for family care and support).