Medical tax rebates stable after budget speech

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Gerhard Van Emmenis, Principal Officer of Bonitas Medical Fund, says private medical aid members can breathe a sigh of relief as the medical tax credit remains unchanged. Treasury has been hinting it would consider reducing the credit to fund National Health Insurance. It was a surprising tax sacrifice and equates to over R30 billion this year and around R35 billion for the coming year.

It is believed the removal of tax credits would have upset too many people who are dependent on it to access private health care and are essentially being rewarded for not burdening government health care.

“Originally, your medical aid contributions would be a deduction against your taxable income. However, from 2012, SARS introduced a medical credit, a ‘tax credit’ which is deducted from your overall tax liability,” says Van Emmenis.

The medical tax credit consists of the following two amounts:

  1. The medical scheme fees tax credit

This applies to the premiums one pays to a registered medical scheme on behalf of oneself and one’s dependants.

  • The main member, as well as the first dependant on the medical scheme, receives a monthly tax credit of R310 (for the 2018-2019 year).
  • All additional dependants receive a monthly tax credit of R209 (for the 2018-2019 tax year).

There are three categories:

1. Under 65 (without disability)

25% of total contributions paid to the medical scheme

Less (4X medical scheme fees credit)

Plus qualifying medical expenses paid less 7.5% of taxable income

2. Under 65 (with disability)

33.3% of total contributions paid to the medical scheme

Less (3X medical scheme fees credit)

Plus qualifying medical expenses paid

3. 65 or over (with or without disability)

33.3% of total contributions paid to the medical scheme

Less (3X medical scheme fees credit) 

Plus qualifying medical expenses

It is important to note that if one’s premium is a deduction from one’s salary or wages, one’s employer is obliged to use the credit system to adjust the monthly PAYE tax accordingly. If one contributes to a medical scheme independently from one’s employer, one receives the tax credit on assessment when completing a tax return.