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:
R319 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. |
R638 per month for the taxpayer and one dependant; or R638 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. |
R215 per month for each additional dependant |
R209 per month for each additional dependant |
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.
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