Despite numerous hints and tips, not to mention “how to’s”, there are many South African citizens that don’t know how to properly complete their annual tax returns. Because of simple oversights tax payers end up at the shortest end of the stick instead of laughing all the way to the bank. They pay the tax man more than they rightfully should and in some cases even incur hefty penalties.
By now it is common knowledge that there are certain expenses that a tax payer may claim from SARS, however before you get to excited we will not be going through all of these, instead we will be taking a closer look at only one such tax deductible expense i.e. SARS medical aid deductions. In the recent past medical aid tax deduction has caused a great deal of confusion amongst tax payers especially since the new MTC (medical tax credit) system was implemented.
Now before you start panicking and speculating about what new devilry MTC may be just relax and listen. Medical Tax Credit or MTC is basically a monthly tax credit which is deducted from your personal payable tax. As of 2013 a South African tax payer is permitted a medical tax credit (MTC) of R230 for the primary member, another R230 for the first adult dependant and an additional R154 for each dependant thereafter.
By implementing the medical tax credit system it is the objective of SARS to bring forth increased fairness as well as equality for all income groups with regards to medical expenses. To put it in more loose terms SARS want medical deductions to be handled more fairly across the entire sector. In the past tax payers with a higher monthly medical aid contribution enjoyed a larger tax deduction. But with the medical tax credit system SARS medical aid deductions are now equal regardless of the taxpayers’ monthly medical aid contribution.
Now that we have covered that below are some of the most commonly asked questions regarding SARS Medical Aid Deductions and Medical Tax Credit:
- Is the MTC system applicable for all ages?
- Can I make out of pocket claims for medical expenses?
- May I claim for an out of pocket medical expense already paid by my medical aid?
- How much of my monthly medical aid contribution can I claim?
- What is a medical aid contribution?
Is the MTC System applicable for all ages?
The answer is no, for South African citizens 65 years of age or older the medical tax credit does not apply. This is due to the fact that that their medical aid contributions are tax deductible in full. What this means is because they are old they are being shown some compassion and their entire monthly medical aid contribution is deductible not just a portion of it. As for the rest of us the medical tax credit remains a fixed monthly amount (see above). Although the tax credit itself is fixed per dependant, the overall tax deductible amount per tax payer varies with regard to the amount of dependants on his/her medical aid i.e. the more dependants you have on you medical aid the higher your medical tax credit will be.
Can I make out of pocket claims for medical expenses?
The answer is yes. However, you should exercise caution when making out of pocket claims. For example if you are disabled, suffering from a disability, or 65 and older you may make an out of pocket claim. However make absolutely sure that the claim is accompanied by the proper requisite form which is freely downloadable from the official SARS website.
Regular tax payers may also make out of pocket claims for medical expenses if and only if the total medical expenses are greater than 7.5% of total income.
Please note that it is of the utmost importance to keep all documentation regarding any out of pocket medical expenses. The documentation will serve as proof of the out of pocket medical expenses you have incurred. Keep in mind that SARS has every right to request these supporting documents, without the supporting documentation you have no claim!
May I claim for an out of pocket medical expense already paid by my medical aid?
The answer is no. You may only claim out of pocket medical expenses not paid by your medical aid, however if you are thinking about claiming for a expense that has already been paid for by your medical aid I advice you reconsider your actions because you will get caught and fraud is a punishable offence.
How much of my monthly medical aid contribution can I claim?
As mentioned above the monthly medical tax credit is set at R230 for the primary member, R230 for the first adult dependant and R154 for every other dependant to my knowledge there is no cap on the amount of dependants you may have.
Please take note that although the information provided here is currently correct, personal tax is a constant changing entity and as such it remains the responsibility of each taxpaying individual to keep up to date with latest development.