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.
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Now that you know that the MTC works to your advantage, you may be interested in knowing the 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 for 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.
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You should note that MTC is an amount that is fixed and only increases with the number of dependents. For instance, in the 2020/2021 assessment (from 1 March 2020 to 28 February 2021), it is R319 per month for the employee who paid the medical scheme contributions, R638 per month for the taxpayer and one dependant; and R215 per month for each additional dependent.
For the 2022/2023 year of assessment, which is from 1 March 2022 to 28 February 2023, the figures are a bit different. It is R347 for the taxpayer or for a dependant who is a member of a medical scheme or fund; R694 per month for the taxpayer and one dependant; and R234 per month for each additional dependant. The credit will be deducted automatically from your payable levy charges. The rates were different in the years before, and you can find more details on the official website.
So, how exactly does it work and apply?
With the figures for your medical aid tax credit 2021 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 a 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 the 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.
DISCLAIMER: This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions of any kind. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!
Source: Briefly News