Complex as it sounds, medical aid tax credit (MTC) is simply a rebate that reduces the amount of tax one pays. The rebate is non-refundable and cannot be carried over to the next year. The credit began in 2013 when it was first enforced after 1st March 2012.
Now that you know that the MTC works to your advantage, you may be interested in knowing finer details of how the credit operates. You may have wondered at one time, does medical aid reduce tax? This can only be established by knowing every detail about the MTC.
How does the medical tax credit work?
For those asking, is medical aid tax deductible in South Africa? Well, according to SARs, the medical aid tax credit, popularly known as MTC is a replacement of the deductions that were allowed for health scheme contributions. It applies to the fees paid by an employee to a registered health scheme for the worker and his or her dependents.
How much tax do I get back on medical expenses?
The essence of MTC was to bring about equality in health care expenses across all income levels. It has created a sense of fairness that most people can identify with, thus guaranteeing quality health services regardless of how much one earns.
You should note that MTC is an amount that is fixed and only increases with the number of dependents. For instance: In the 2018-2019 assessment you get R310 per month for the employee who paid the medical scheme contributions, R310 per month for the first dependent and R209 per month for each additional dependent(s). The same figures apply for the 2019/2020 year of assessment ( which is from 1 March 2019 - 29 February 2020). The credit will be deducted automatically off your payable levy charges. The rates have been different in the years before.
So, how exactly does it work and apply?
With the figures for your medical aid tax credit 2019 in mind, you may want to know how this whole thing works. It is essential when all you want to do is focus on qualifying medical expenses for tax deduction.
MTC impacts both employers and employees effectively. The employer has to factor in the credit when making calculations on the employees' levies to be deducted from his remunerations. Any individual whose MTC has not been factored in by the employer, like the cases of retired individuals receiving a pension; or any person that is self-employed, can make a claim of the MTC on assessment by submitting their annual income returns.
Understanding the medical aid tax credit is for your own good. Make sure that your employer considers it or that you can follow up and enjoy its benefits.
- All Discovery medical aid plans: detailed comparison 2019
- What is tax free savings account and how it works in South Africa 2019
- Genesis Medical Aid Schemes detailed review 2019