Claiming medical
expenses from SARS is easier than most people think.
Read on and you’ll soon understand the basic calculations behind medical scheme
fees tax credits.
Medical expenses
In 2012, SARS changed the way it treats medical expenses and introduced a medical scheme fee tax credit. Originally, your medical aid contributions would be a deduction against your taxable income. Now, this medical credit is a tax credit which is deducted from your overall tax liability. The medical tax credit consists of the following two amounts:
- The medical scheme fees tax credit; and
- The additional medical expenses tax credit
What is the medical scheme fees tax credit?
This rebate applies to
the fees paid by you, as a taxpayer, to a registered medical scheme on behalf of yourself and
your dependants. The main member, as well as the first dependant on the medical
scheme, will receive a monthly tax credit of R310 (for the 2018-2019 tax year).
All additional dependants will receive a monthly tax credit of R209 (for the
2018-2019 tax year).
If you are paying your contributions via your employer, i.e., as a deduction
from your salary or wages, your employer is obliged to use the credit system to
adjust your monthly PAYE tax accordingly. If you contribute to a medical scheme
independently from your employer, you will receive the tax credit on assessment
when you complete your tax return.
What is the additional medical expenses tax credit?
This is a tax rebate, which means that the overall amount of tax you need to pay at the end of the tax year is reduced. The amount of your tax rebate is made up of all the extra money (out-of-pocket expenses) you have spent on qualifying medical expenses that weren’t covered by your medical scheme. This amount accumulates throughout the tax year.
Qualifying out-of-pocket expenses include the following:
- Consultations, services or medications from a registered medical practitioner, orthopedist, physiotherapist, dentist, chiropractor, herbalist, homeopath, optometrist, osteopath or naturopath.
- Admission to a registered hospital, including nursing homes.
- Care at patient’s home by a registered nurse, nursing assistant, nursing agency or midwife.
- Medicines prescribed by a duly registered physician (as listed above) and acquired from a duly registered pharmacist.
- Medical expenses on services rendered or medicines supplied outside of South Africa and which are substantially similar to the services and medicines listed above.
- Money paid towards treatment of a physical impairment or disability (as long as it is a qualifying expense prescribed by the Commissioner).
It is important to
note that “over the counter” medicines, such as cough syrups, headache tablets
or vitamins, do not qualify as medical expenses, unless specifically prescribed
by a registered medical practitioner and acquired from a pharmacist.
To calculate the additional medical expenses tax credit, special formulas are
used. The specific formula to use depends on your age and whether you or one or
more of your dependants has a disability.
