New tax credit to replace medical aid deductions in post 2012 Tax Year

The 2012 tax year has almost come and gone, and being annual budget time, anxious taxpayers are unsure what to expect. Is there any room to be taxed further? All will be revealed on Wednesday the 22nd, but in the meantime let’s focus on the new medical aid tax regime.

Gone are the days of paying your spouse’s medical aid and claiming the deduction just because you are in a higher tax bracket. From the 2013 tax year onwards that deduction is no longer allowed. Instead it will be replaced with a tax credit per dependent. “What is the difference?” I hear the average taxpayer ask, and “How does it affect me?”

A deduction is an amount/expense that you are allowed to subtract from the total income you earn to calculate your taxable income (a portion of which you pay to the tax man). Under the old tax regime, the more income you earned the greater your benefit would actually be – since the deduction was subtracted BEFORE calculating your taxable income calculation. The tax credit now is a single amount and is taken off AFTER you calculate your taxable income. So whatever tax you owe, you just subtract the credit. No more medical deduction proportional to your tax rate unfortunately.

Example (made up rates and numbers):
Ivan earns R60,000 and pays R4000 for his spouse Tohiera’s medical aid

Before:
Taxable income = 60000 – 4000 = 56000 x tax rate (40%) = R22,400 tax payable to SARS

Now:
Taxable income = 60000 = 60000 x tax rate (40%) = R24,000
Less: R1800 tax credit = R22,200 tax payable to SARS

Why is this happening? Well as we move closer to having a National Health Insurance, government has decided it is a good idea to equalise the medical system. The new credit makes it fairer to all – regardless of how much money you make – and you can always spend extra on private healthcare if you require it. The ultimate goal (and indeed a worthy one) is free basic healthcare for all!

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170 Responses to New tax credit to replace medical aid deductions in post 2012 Tax Year

  1. Joannes Willem Jozef Maria POOT says:

    I do not understand your example! Your are speaking about a cost of R 4000 in medication and in your new system you only deduct R 1800… where is the difference coming from? What do you mean with TAX CREDITS? How are they calculated?

    • Tim says:

      Hi Joannes,

      Thank you very much for your comment/question.

      SARS are allowing a credit of R230 per month for the first 2 members and thereafter R154 per month for any further dependents. So once you have calculated your taxable income you would then be allowed these amounts as a tax credit, so a reduction in your tax liability. The example uses made up numbers. Under the old system you would be able to deduct the R4 000 (subject to certain rules) and then get a tax relief based on the percentage tax you paid. The new system allows for one amount no matter what percentage of tax you pay.

      I hope this helps?

      Regards,
      Tim

  2. Carmen Stroiz says:

    HOW DOES THE CLAIMS FOR DISABILITY ON MEDICAL WORK ON YOUR RETURN, WE PAY OUT OF OUR POCKET FOR NAPPIES AND CERTAIN GENERIC MEDICALTION THAT DOES NOT GO THROUGH THE MEDICAL AID – DO WE STILL SHOW THE FIGURE ON OUR RETURN UNDER MEDICAL AID EXPENSES FOR A DISABLED CHILD?

    • Tim says:

      Hi Carmen,

      Thank you for your question, always happy to help.

      If there is a family member who meets the definition of a disabled child then all the related medical expenses, paid out of your pocket and not reimbursed by medical aid can all be claimed as a deduction for the 2012 tax year. When you submit your return these amounts will be included in the, “State any disability expenses not recovered from your medical scheme” box.

      I hope this answers your question? Feel free to follow up if there is anything else.

      Regards,
      Tim

  3. Nthati says:

    Hi Tim

    I am single with no children earning a salary of around R10 000 and pay R1 800 medical aid. How does this “medical aid credit” affect/ benefit me. thank you.

    • Tim says:

      Hi Nthati,

      Thank you for the contribution.

      The R1800 is that per month? If this is the case then you will receive a tax credit of R230 per month which will be taken off your calculated tax liability. However there is some good news. After you have calculated your taxable income before medical deduction (in your case – R10 000) you can multiply by *7.5% which is = R750. The R1 800 less the R920 (new laws of excess of 4x allowable tax credits) = R880 -R750 = R130 per month can then be deducted each month as well, meaning your monthly taxable income would be (R10 000 – R130)

      Rough figures of course, with a series of assumptions, but i hope that helps at least.

      Regards,
      Tim

  4. Kim says:

    Hi Tim,

    I have just started paying medical aid for myself and two dependants. The total for the 2 dependants per month is R1110 and my main member contribution is R918. My salary is R9900 per month. Would I qualify for tax credits. If yes, could you give me a rough idea as to what those credits would be?

    Would I have to earn R10 000 or more to be able to qualify for tax credits?

    Regards,
    Kim

    • Tim says:

      Hi Kim,

      Thank you very much for your great question.

      Luckily there is no minimum level of income that you need to earn in order to take advantage of the medical tax credit system. If of course you earn less than R63 556, the level of income at which you start paying tax, then it wouldn’t really matter.

      So using your situation where you earn R9 900 per month and based on the number of medical aid members you have you will be allowed a credit of the following:

      R230 per month – for yourself
      R230 per month –for your first dependent
      R154 per month – for your second dependent
      Total: R614 per month – for all three of you

      Your medical expenditure is R1 110 + R918 = R2 028 so unfortunately you would not qualify to deduct any other amounts.

      On your level of income and after your tax credits you will be paying tax of R2 576 for the 2012/2013 tax year (your employer will probably deduct more and you will claim a refund at year end).

      I’ve made some assumptions here, so these amounts are based on the information you have provided.

      I hope this helps and please keep the questions coming!

      Regards,
      Tim

  5. Silvana De Mattia says:

    Hi Tim

    I am 60 years old, retired, and receive my income from investments. I pay medical contributions for myself and my son who is still studying. Does the R230 pm month apply to me or are any consessions made for retirees? This has a huge impact on my tax refund at the end of the year

    Many thanks

    • Tim says:

      Hi Silvana,

      Unfortunately the requirement for retirees is that they be 65 years or older. If you were over 65 then all amounts paid could have been claimed, but for this purpose tax law defines retirement age at 65.

      You will be able to claim the R230 for both you and your son, so R460 per month. Depending on how much your taxable income and medical expenditure are there may be some medical deductions allowed if your contributions are in excess of R460 x 4 and this is then greater than 7.5% of your taxable income. There may be other factors as well given your type of income, assuming they are only dividends and interests.

      Sorry i could not provide better news.

      Kind regards,
      Tim

  6. Zinhle says:

    Hi,

    I earn R12000.00 per month.. My medical aid is R1125.00, the company has been paying R720.00 towards my medical aid (as per capped amount)… i have been paying the difference of R405.00… does this mean the company is not going to contribute towards my medical aid as there is no capped amount??

    how is the tax credit going to work, I really dont understand it…

    • Tim says:

      Hi Zinhle,

      The new medical tax credit system won’t necessarily mean that your employer is not going to pay towards your medical aid contributions. From 1 March 2012, they will factor this into the account. Remember that the more of the contribution they pay, the more likelihood you will be taxed as a Fringe Benefit (Look out for a future blog post on Fringe Benefits). Your employer will structure their payment in such a way that you won’t lose out.

      The tax credit will be an amount that is taken off after you have calculated your tax liability. So if you owe R15 000 in tax payable then you may have a credit of R230 x 12 if you are the only member of the medical scheme. This is different to how it was calculated before as you would first deduct the capped amount and then calculate your taxable income and therefore tax payable.

      I hope this helps?

      Regards,
      Tim

  7. Carin says:

    If the medical aid contributions are paid privately, and not by the company, does it still qualify for the medical aid tax credit? My daugther earns R10K and pays for her own medical aid approx R1330.00 per month.

    • Tim says:

      Hi Carin,

      Thank you for your question.

      Regardless of who pays for the medical aid, a credit will still be allowed. Your daughter will be allowed R230 per month as a tax credit. Under the new credit system she is actually better off than the old medical aid deduction system so it actually is a winner here.

      Regards,
      Tim

  8. pp says:

    dear tim
    how does tax credit work if you conrtibute 50% and the company contibutes 50%
    pleas explain fringe benefit tax. will we lose out. would we be able to claim any expenses over and above medical aid rates.

    • Tim says:

      Dear Prithe,

      Thank you for your question.

      You will still be entitled to the medical credit regardless. Your final tax calculation will take it into account. A fringe benefit where your employer provides a service or pays for a benefit of the employee which the employee would otherwise pay for themselves. The employer claims a tax deduction for this payment, so SARS then taxes the employee to make that up. Essentially the employer is giving the employee something for nothing, which should form part of their salary and be taxed. Lookout for the an upcoming blog on all about Fringe Benefits

      You are able to claim medical aid expenses above the medical tax credit. If the amount paid exceeds 4 times the tax credit and you have other medical expenses which you did not get refunded for, then you must add all this together. Then take your taxable income and x by 7.5%. The medical amount greater than the 7.5% can be claimed as a deduction.

      Example:
      Medical Credit = 230 x 12 = R2 760
      Medical Aid Rates = R2 000 x12 = R24 000
      4x medical aid credits = R2 760 x4 = R11 040
      R24 000 – R11 040 = R12960
      Other medical expenditure R7 040
      Total medical expenditure allowed – R20 000
      Taxable Income = R100 000 x 7.5% = R7 500
      Therefore R20 000 -R7 500 = R12 500 can be deducted as well

      I hope this helps

      Remember to visit http://www.taxtim.com

      Regards,
      Tim

      • Ryan says:

        Hi Tim

        Thanks for the wonderful blog. A quick question regarding the 4 x tax credits.

        In one calculation you too the monthly tax credit of R230.00 x 4 = R880 and deducted this off the 7.5% Gross Income and said the R130 in the example would also be deducted from the income before tax is calculted. In another example you took the R230.00 x 12 = R2760 and then multiplied the R2760 x 4 as the tax credit cap… which method should be used in calculated the tax credit cap.. i am abit confused.

        • Tim says:

          Hi Ryan,

          Both examples are correct, it’s just the latter one is for the full year and the first just for the one month. Rather use the annual calculation as your taxable income is calculated based on annual earnings and deductions.

          I hope that answers your question? Please feel free to ask away otherwise.

          Thanks for the great words about the blog!

          Regards,
          Tim

  9. nazo says:

    Hi Tim;

    So you are saying that companies currently paying the med aid contribution as a fringe benefit is taxable income for the employee? Is this correct? And the employee is not entitled to claim the ‘per dependent’ tax credit? Correct?

    So it would be to the employees advantage if their salary is restructured so that the med contribution is shown as a “deduction” – correct?

    What about if say the medical aid ‘deduction’ (employee contribution) is shown as R700, and the med aid fringe benefit, is shown as R2000 (the company contribution)… (Total monthly med aid premium is R2700). Will the employee still be able to claim this new 2013 tax credit (per dependent) in full or will it be pro-rated to the R700 employee contribution. Or will the tax credit be not allowed altogether for the employee.

    • Tim says:

      Dear Nazo,

      Excellent question, the new medical aid credit regime will give rise to some restructuring, but mainly due to the change in amounts.

      Currently where the employer pays for the full medical aid contribution, the amount over R720 per month is treated as a fringe benefit as you would be allowed a deduction of R720 per month under the previous regime. So if the contribution is R1 000 per month then the fringe benefit will be R280 which is taxable. So the taxpayer is in the same position as if they paid the contribution themselves and claimed the deduction.

      So now whatever is considered a taxable benefit, the amount over the credit still allowed, can be considered a fringe benefit. Generally the principle has always been that if the employer pays more than two-thirds of the contribution amount then the difference between the deduction and the contribution is a fringe benefit. This rule is most likely to continue, but we await full guidance. The credit will always be available to the employee, regardless. There will never be a situation where the taxpayer is out of pocket and cannot claim the credit.

      I hope this helps a bit, as with all new laws there are some things that get worked out as we go along.

      Look out for continued updates on http://www.taxtim.com and keep the questions coming.

      Regards,
      Tim

  10. H.B says:

    What would happen in the event that a taxpayer does not have a medical aid, but pays for ALL allowable medical expenses out of pocket. Would such a taxpayer be allowed the tax credit even though they do not have a medical aid?

    • Tim says:

      Hi Harri,

      Excellent question and thanks for asking it.

      In the event that a taxpayer does not have any medical aid, but all expenditure is covered by themselves then unfortunately no tax credit will be allowed. HOWEVER this does not mean that you won’t be able to deduct any of these expenses.

      What would happen is you would calculate your taxable income. Then multiply that by 7.5% and anything over the 7.5% that was spent on medical expenditure by yourself will be allowed as a deduction.

      I hope this answers your question?

      Regards,
      Tim

  11. Soraya Rayned says:

    Hi
    My mom is a state pensioner, and only receives 1 100 a mnth for her pension.
    I am recently resigned and am self employed, but i pay my moms medical aid which is 850 per month. She is not a tax payer, she is also not egistered on my medical aid but on her own medical aid. if i add her onto my medical aid as a dependant it would cost me much more , close to 3000pm which i wont be able to afford. each month i have to pay cash for her meds which amounts to 300pm because the medical aid does not cover for her medication. is there any way i can claim for tax credits for either myself or my mom. you see although it is her medical aid registered in her name, i pay the medical aid and it comes off my account each month because she is my dependant and i need to care for her.
    How can the tax credits assist me?

    Regards
    Soraya

    • Tim says:

      Dear Soraya,

      This is a common problem here in South Africa, what to do if you pay for someone’s medical aid. The practice is that you can claim this benefit, if asked for documentation from SARS you will obviously have to produce the records you have mentioned above.

      Your mother as a pensioner and earning a state pension with no other income will not have to register or pay any tax so she would not take advantage of the credit. HOWEVER you may claim her credit of R230 per month as part of your medical credit claim, provided you can show proof that you are funding the cost and she isn’t reimbursing you.

      Please continue to ask questions as and when they come up.

      remember to visit http://www.taxtim.com

      Regards,
      Marc

  12. Charmaine says:

    Hi,
    The Company pays for the full medical aid contribution which amounts to R4252, there are 3 members on the medical aid. What impact will the medical aid tax credits have on the employee. I understand that the employee will be taxed on the full R4252 but what relieve does the employee get?

    • Tim says:

      Hi Charmaine,

      The employee will still get the relief of the tax credits being R230 each for the first 2 members and R154 thereafter. The employee will be taxed on the R4252 because effectively it is part of his/her salary. SARS will then still allow the credit to be claimed. Most companies structure their employee’s salary like this as it allows the employee to get a bit extra in their account each month and the employer gets a tax deduction.

      Bottom line is, the taxpayer will never not be allowed to claim the tax credit where it is due to him!

      Regards,
      Tim

  13. Ignatius says:

    Hi
    i am paying my medical R1552 my gross salary is R22298.75.The credit will come to my nett salary or how does it work

    • Tim says:

      Hi Ignatius,

      Well, firstly are you paying the medical aid yourself, or is your employer paying for it? You will receive the credit at the end of your tax calculation, after calculating how much your tax payable will be. You will then take of R230 for every month you contribute to a medical aid.

      Regards,
      Tim

  14. Juliana Yzel says:

    Hi Tim,

    So far I think I have a pretty good understanding of the new system vs. the old. However, on 2 websites there are referrals to high income earners, who fall in tax brackets above 30%. On both sites, they mention that such high income earners will pay more tax and thus have a lower net income. I’ve been doing calculations and I don’t see it! With the general tax relief, it still seems to me that, regardless of any tax bracket, everyone will pay less tax.

    Am I missing something? When, if ever and under normal circumstances, will someone pay more tax now than in the 2012 tax year?

    Thanks!

    • Tim says:

      Hi Juliana,

      Thanks for the great question, many people are confused by this. The reason why higher income earning taxpayers are going to be paying more tax under the new medical aid tax credit regime is that the amount allowed as a credit, R230 per month is less than the R720 deduction allowed under the old system.

      For example R230/R720 = 32%

      Where as someone who pays tax at the marginal rate of 40% used to be able to get a deduction of R720*40% = R288 per month, they are now limited to R230 per month.

      I hope that helps answer your question?

      Regards,
      Tim

  15. Meg says:

    Hi and thanks for the great website~!
    I have an employee who earns R25,000 and has 4 dependents. His med scheme is R4704 of which the company pays R2,760.
    Does this now mean that his taxable income will be (25,000 + 2760) and he will receive a tax credit ofR922?
    Thanks

    • Tim says:

      Hi Meg,

      Thank you for the positive words about TaxTim! Always appreciated.

      Before I answer this question, the R25 000 that is earned, is that the cost to company including the medical aid amount?

      Regards,
      Tim

  16. Ronald says:

    Hi Tim,
    I pay my medical aid from my own account, the company has no contribution, there is also no monthly calculation done at the moment on my salary, in the old system I would get a tax certificate back from my medical aid of which I would then give to my tax consultant, he would then do my tax return and get me a tax refund, how would this system affect me and do I have to get the rebate monthly now or can I still have it claimed at the end of the tax year.

    Thanks.

    • Tim says:

      Hi Ronald,

      Thank you for the question, always welcome.

      The process remains the same as before, the only difference is now instead of getting a deduction you will qualify for a tax credit. This will be done at year end as well based on R230 per month you belong to a medical aid scheme. Your tax consultant will be able to do this for you. Alternatively you can use http://www.taxtim.com when tax season opens in July 2012.

      I hope this helps.

      Regards,
      Tim

  17. Lindile says:

    Hello Tim

    I earn a gross income of R35301 per month, I pay R4212 as monthly medical aid fees. Out of this monthly fee R1750 is employers contribution and my contribution is R2462 and that equal the R4212 I mentioned above. Its myself and 3 dependents = 4 members.

    Based on this cenario what will be my tax credit.

    Thanks
    Lindile

    • Tim says:

      Dear Lindile,

      Thank you for the question.

      The tax credit will work as follows:

      R230 for yourself and your first dependent and thereafter R154 for the next two dependents. So for the tax year you would be allowed a credit of R9 216.

      I hope this answers the question.

      Regards,
      Tim

  18. Nelly Naidoo says:

    Dear Tim,
    I have my own medical aid and my kids have their own but I paid 40% for medical aid for my 2 kids who are on my late hubby’s medical aid. His company pays 60%. The R230 credit x 2 = R460, do I claim this back when I am doing my tax return.

    Thanks
    Nelly

    • Tim says:

      Dear Nelly,

      Is your late husband’s company going to continue to pay the medical aid in the future?

      What usually happens is that on assessment, when you complete your return, you will indicate the number of members that you contribute for. SARS will then calculate the deduction, in this case the credit and make the adjustment to your tax liability. Remember that for the tax returns you will be completing in July-November 2012 the old deduction system is still applicable.

      Regards,
      Tim

      • Nelly Naidoo says:

        Thank you for your response. Yes, company to will pay 60% until they are 21. The Tax credit will only comes into effect for 2012/2013 tax season? Are the tax form/efiling going to be amended to accomodate for Tax credit? For this year I will complete efiling as per normal.

        Thanks
        Nelly

        • Tim says:

          Hi Nelly,

          The new forms have not been issued yet, but they shouldn’t change much. The amounts will still be calculated as normal, but SARS will calculate the actual tax effects on their calculation assessment taking into account the new credits. For the 2011/2012 tax season which opens in July, you would complete as normal.

          Regards,
          Tim

  19. Maughin says:

    Hi Tim,

    My medical aid is covered 100% by my employer. How will the new medical aid affect me? Will I be paying out more money?

    • Tim says:

      Hi Maughin,

      Great question!

      It all depends on how much your taxable income is and what the cost of the medical aid is as well? The basic principle is that you will received a R230 per month tax credit regardless of who pays the medical aid. However if the company pays for the full amount, any payment over this could be seen as a Fringe Benefit. At the end of the day, you may be paying more now, but on assessment you will get a bigger refund. If you fall into the taxable income bracket of over 30% then you will probably be paying more now than before. Remember though that thew new medical aid tax credit system only kicks in next tax season.

      I hope this answers your question.

      Regards,
      Tim

  20. Tina says:

    Hi,
    I earn a basic salary of R18 500. My employer contributes 50% on medical aid, how much will i pay on tax?

    • Tim says:

      Hi Tina,

      Does this basic include the medical aid and how much is the full contribution?

      Regards,
      Tim

      • Tina says:

        My basic R 18 500 does not include medical aid contribution by the company, my contribution isR758 and the company pays R758. The total i pay for the medical aid is R1516. So i need to know the my net salary

  21. Shivaan says:

    Hi Tim

    1. If i pay my medical aid via debit order privately will i still get my R230PM X 12 at the end of the tax season i.e. July 2013?

    thanks

    • Tim says:

      Hi Shivaan,

      Thank you for the question, I think a lot of people will be wondering about this issue.

      The answer and I think you will be happy to hear is yes, regardless of how the medical aid contribution is paid, you will be allowed to claim the tax credit at during the 2013 Tax season.

      Regards,
      Tim

  22. Nothando says:

    If my partner and I both have taxable incomes, under the new tax system which is better, to have combined medical aid or for each of us to have our own.
    I recently closed my medical aid and joined my spouse as a dependant but now, I’m questioning the merit of my move, as my medical aid amount was deducted from my spouse’s net salary.

    • Tim says:

      Hi Nothando,

      Thank you for the question.

      Under the previous medical aid tax regime it would have been better to have the medical aid paid by the person who was in a higher tax bracket. However now it makes no difference as in your case as both of you are entitled to a R240 tax credit regardless of the cost of the Medical Aid Scheme or who pays for it.

      I hope this answers your question.

      Regards,
      Tim

  23. Tim says:

    A recent question was asked:

    Hi Tim
    I tried to post on your thread.Unfortunately there was a problem , with the
    security code for some reason
    Here is my question:

    “If I understand you correctly a person who pays his medical bills cash
    will receive a lesser tax benefit/credit.
    I earn 15 000/month .My medical bill of roughly 1500/month for a family of 3
    is paid cash.
    I have structured my income over a long time in such a way that I have a
    handy cash reserve for medical expenses while earning interest.Can you
    compare my situation to a person , in the same income bracket who has a MA
    of lets say 1500/month?
    Furthermore I will have to wait till the end of the tax year to claim it
    back from the receiver whilst the MA person gets the credit monthly.
    Why is the state discriminating against us? Is it fair according to the
    constitution?”
    You can answer on the thread
    Thank you very much
    Joh

    • Tim says:

      Hi Joh,

      Thanks for the great question. I think a lot of people find themselves in this situation.

      In most cases, from a tax perspective it is better to have a medical aid. As you said this is because the tax benefit occurs each month as opposed to occurring at year end. Unfortunately you are one of the few people who actually save in case there is a need for medical expenditure. Due to most people not doing this the government encourages people to “save” towards their medical well being by offering a tax incentive.

      Let’s start with your details and calculate the tax situation (As an aside, what type of investment do you put the reserve cash into?)

      2013 Tax Year

      Income:
      R15 000 income per month (assuming after tax)
      R1 500 medical expenses per month (assuming for you, your spouse/partner and child and that no one has any disabilities)

      Annual Income = R180 000
      Taxable Income = R180 000 (assuming no deductions)
      7.5% of Taxable Income = R13 500

      Therefore you will be allowed to deduct R4 500 of your medical expenditure*
      Tax Payable = R21 235

      *By not having a medical aid the only deduction you can claim is an amount greater than 7.5% of your taxable income which in this case amounts to R4 500

      Person with a medical aid of R1 500 per month

      Taxable Income = R180 000
      Tax Payable before Tax Credits = R22 360
      Tax Credits = (230 +230 +154) x12 = R7 368
      Total Tax Payable = R14 992

      As you can see there is quite a difference in the Tax Payable in the situation you don’t have a medical aid. (If it helps at all, the new medical tax credit regime actually reduces the tax payable for taxpayers in your tax bracket.)
      With regards to having to wait for your refund from SARS, this depends on whether or not your medical aid is paid by your employer or by you. If you pay your own medical aid then you will only receive the tax benefit at year end, like you do now. If your employer pays it then you will get more after tax pay each month with no real tax benefit at year end.

      There are several reasons why it is a good idea to have a medical aid, the tax benefit only being one of them. To answer your other question about the constitutionality of this, tax is supposed to be equitable, but this isn’t always the case. The taxpayer has the choice to as to how they want to structure their affairs so the argument could be made, choose what suits you the best?

      Regards,
      Tim

  24. Benno says:

    Hi Tim

    If an employee does not pay paye. Does the tax credit apply?

    • Tim says:

      Dear Jeremy,

      Regardless of the employment status of the Taxpayer, he/she will still be entitled to the tax credit on the tax he/she owes. So to answer your question, no it won’t matter if the taxpayer does not pay PAYE.

      Regards,
      Tim

  25. Tina says:

    Hi Tim,

    I need to know how much my net salary is : i earn a basic salary of R18 500. The company pays R820 towards medical aid over and above the R18 500. I pay R820 towards my medical aid. Meaning the company pay 50% contribution towards medical aid.

  26. Al says:

    Good Day

    My wife earns R11800 and pays R2836 to the medical aid. Her company does not have a medical aid and she pays out of her own pocket. Firstly how does the new tax credit affect us and secondly when does the tax credit come into effect?

    • Tim says:

      Hi Al,

      Thanks for the question.

      Firstly, the new Medical Aid Tax Credit system comes into affect for the 2013 tax year, so effectively only for next year’s submission.

      In your wife’s case she will be allowed a tax credit per month of R254 for herself and if you are a dependent as well then another R254 per month. This will only be taken into account at the end of the tax year so unfortunately the benefit is only seen then.

      Regards,
      Tim

    • Al says:

      Thanks Tim

      I forgot to mention that my daughter and I are dependants.
      So will the calculation be as follows
      254+254+158 =666
      666 *12 months = 7992
      Will this be the rebate or is there another calaculation to take into consideration

      • Tim says:

        Hi Al,

        With regards the medical aid credit this is correct, at year end you will be entitled to a credit against tax payable of R666 per month for your family. You can always keep your other medical expenditure and if this amount exceeds 7.5% of your taxable income then that exceeded portion will be allowable as a deduction as well.

        Remember this is only for the tax year ending 28 February 2013.

        Regards,
        Tim

  27. Antonia Leferink says:

    Hi,
    I got a question.
    We got medical aid that doesn’t cover/payout for a lot of treatments.

    Now we had quiet some expences that we knew the medical aid wouldn’t cover.
    We paid them straight and didn’t let the doctor send the bill first to the medical aid.
    So those expences are not covered in the Tax return from the medical aid under “claims not paid”
    I got all the receipts from those expences and all are done by registered doctors or medical practicioners.
    Can I add those expences ontop of the one’s under “claims not paid by medical aid”?
    Must I full in the full amount or only the tax (14%) of that amount?

    Great thanks

    • Tim says:

      Dear Antonia,

      Thank you for this question, I think it actually asks quite a few things taxpayers are confused about.

      For all the qualifying medical expenditure you incurred which wasn’t covered by your medical aid, this should be entered in the following box:

      “State any medical expenses not recovered from your medical scheme (other than
      physical impairment or disability expenses) 4020”

      All these expenses will then be included in your return and SARS will calculate how much you can claim back against your tax payable.
      The amounts that you put in are the totals at the bottom of each invoice you received. That tax of 14% is actually the VAT portion.

      So for example if your invoice has:
      Services = R100
      VAT = R14
      Total payable = R114
      You would include the whole R114

      I hope this helps answer your question, keep them coming in!

      Regards,
      Tim

  28. Zeeman says:

    Hi Tim

    Excellent website :-)

    I earn in excess of R 1M per annum , and only have myself and my spouse on cover. Do i understand this correct that i will only receive the R 230 x 12 x 2 = R 5 520 deduction annually or R 460 monthly ?

    • Tim says:

      Hi Yorick,

      Thanks very much for the compliment on the website, we’re glad you are happy with it and always appreciate compliments!

      The R5 520 amount is correct however this won’t be in the form of a tax deduction, but a credit against your tax payable at year end only. So given your income range you actually are worse off under the new system then the old one.

      Thanks for the question and keep them coming.

      Regards,
      Tim

  29. Dulcie says:

    I have Power of Attorney to manage my mom’s finances – she receives a private pension of about R4200 (gross) per month and is 81 years old. She does not currently file a tax return. Through the pension fund, there is a medical aid benefit paid 50/50.

    I have just received her medical aid tax certificate and claims not covered by scheme amounted to R12 410 (this has almost depleted what little savings she has). Can I register her as a tax payer and claim this back? Would she be able to benefit from the new medical aid tax regime? If so, can I register on her behalf as I have the POA?

    • Tim says:

      Hi Dulcie,

      Unfortunately registering your mom as a taxpayer will not make a difference as she does not earn enough to pay tax. Therefore any deduction she would have been allowed based on her medical aid contributions and other expenses won’t be taken into account.

      I wish I had a better answer for you.

      Regards,
      Tim

  30. Llani says:

    Hi Tim,

    Hope you can help.

    My mom and dad are pensioners and their combined annual income is approximately R36 000. They have a medical aid where they pay R1400 per month, I have just received their tax certificate from Discovery and there is R23 000 that Discovery did not pay of their medical expenses (my dad has cancer).

    My question is, would they be able to claim anything back from SARS/

    • Tim says:

      Hi Llani,

      Firstly I’m very sorry to hear about your dad. Unfortunately though as your parents both earn under the taxable threshold you would not be able to claim any medical expenses as a deduction because there is no taxable amount to claim it back against.

      I wish I had a better answer for you.

      Regards,
      Tim

  31. Shivaan says:

    Hi Tim

    Under the old system (2011) i have paid R12025 for medical aid for 9months only till 28Feb 2012. How much of a tax deduction can i claim back from this? Bearing in mind i paid this via debit order. im not sure about how the old system works.

    My package for that financial year was R115k pa and bonus of R7K – total R122000

    thanks Tim – Great site

    • Tim says:

      Hi Shivaan,

      Assuming your medical aid contribution was R12025/9 = R1336 per month and that you paid this out of your own pocket and not via your boss.

      You would be able to claim R720 per month for 9 months which is R6480. You would also be able to then claim any amount over 7.5% of taxable income as medical expenditure. However you would not qualify in this instance unfortunately.

      Given your tax rate of 18%, you will be entitled to a refund of R1231.

      This is only a rough estimate based on the information provided, but should be close to the actual amount.

      I hope this helps.

      Regards,
      Tim

  32. Jackie Aspeling says:

    I have no dependants and my medical aid per month is R560.00 (private medical aid) will I qualify for a tax credit

    • Tim says:

      Hi Jackie,

      You will receive a tax credit of R230 per month for every month you have contributed to a medical aid regardless of whether it was paid by you privately or through work. However you will only see this at the end of the 2013 tax year.

      Regards,
      Tim

  33. Patrick Mathibela says:

    Hi

    I am earning R26,500-00 a month and contribute R1,312-00 towards medical aid as a fringe benefit. Can you tell me what is my taxable income and how much will my tax liability be in this instance. The company pays for the medical aid, which means that i earn R27,812-00 a month.

    Regards,

    • Tim says:

      Hi Patrick,

      Before i answer the question, which tax year are your referring to?

      Regards,
      Tim

  34. Andrisha says:

    Hi Tim

    I currently earn about R13800 p.m (ctc), i pay a company provident fund which totals R2000 p.m (my portion is taxed), i have my own medical aid but my company contributes R585 which is shown as additional income and i am taxed on it, please explain how the “tax credit” would affect me as i dont get it back into my salary as all other employees do……..

    • Tim says:

      Hi Andrisha,

      The tax credit affects you in exactly the same way, the only difference is that because your company pays a portion of your medical aid, you get taxed on a certain portion. However at the end of the year regardless, you will be entitled to a R230 tax per month. Remember though that the tax credit only begins in the 2013 tax year.

      I hope this helps?

      Regards,
      Tim

  35. jaco says:

    Hi,

    Lets say someone is paying there long term partner cash every month to be on the partners medical aid, could one claim that on one’s own tax as a deduction?

    thanks

    • Tim says:

      Hi Jaco,

      In theory yes you can claim this amount. However if the person paying the medical aid is at a higher tax bracket than you, it makes more sense for them to claim the deduction. In this way they get a bigger refund.

      SARS doesn’t mind who claims the deduction, but as long as only one person does so.

      Regards,
      Tim

  36. Thomas says:

    Hi Tim,

    I pay my own medical aid of R5,099.00 per month.

    I am an independent contractor (3616 – on my IRP5). It is me, my wife and 3 children on medical aid. I have a disability.

    How much “Tax Credits” will I get under the new system?

    Thanks

    • Tim says:

      Hi there,

      For the next tax year if you have a disability then you may claim all your medical expenditure as a deduction. Your wife and 3 children, however will only be entitled to a claim of R230 per month for your wife and R154 for each child per month. So you need to look at your Medical Aid Tax Certificate and separate the amounts out.

      I hope this helps.

      Regards,
      Tim

  37. esperance says:

    hi tim
    if i am a taxpayer with a spouse and 4 dependends , and my total contribution is 34800,
    my employer contributes 15400 , and my taxable income before the medical deductions are 165879, how much in toital will i get as medical deductions in terms of the new provision of 2013?
    thank you

    • Tim says:

      Hi,

      Thanks for the question!

      For the 2013 season your tax credits will be R230 per month for you and your spouse and then R154 per month for your 4 dependents. So in total R12 912 would be available as a medical tax credit. As the law stands you would be allowed to deduct a further amount which is greater than 4x your allowable tax credits which exceed 7.5% of your taxable income. Unfortunately you don’t exceed that. So you will be limited to the credit of R12 912.

      I hope this answers your question?

      Regards,
      Tim

  38. Ryan says:

    Hi Tim,

    If the taxpayer pays his medical aid contribution privately (not through the company): Is the company compelled by law to take this into consideration when processing the monthly payroll?

    Regards,
    Ryan

    • Tim says:

      Hi Ryan,

      That’s actually a very good question.

      The problem the company faces in a situation like that is that they would not be able to claim the amount you pay for medical aid as a tax deduction as it is not part of their expenditure. They would probably also not be able to adjust their payroll system for one staff member. From a numbers point of view by having the payment on your payslip it would affect your nett-salary so they are very hesitant to do so, if they aren’t paying it. As far as I am aware there is no specific law compelling your employer to do this.

      May I ask why you would like them to do so? The cash difference in your bank at month end won’t be a very big amount.

      Regards,
      Tim

  39. Esperance says:

    Hi Tim
    the new provision thereof still entitles you to claim the full contribution( yours and the employer) , if it exceeds 4 times the tax credits and also exceeds 7.5% of the total bfore the medical aid deductions?

    as this credits will be deducted from the taxable income after the tax rate ( maybe 40%) have been deducted, then will the taxable income which has to b multiplied by 7.5% not reduced by the tax credits before calculating the excess of the contributions which could be claimed?

    Thank you

    • Tim says:

      Hi there,

      Great question!

      Taxable income is the amount that tax payable is calculated on, so therefore the tax credits will get taken off once the calculation is done. The extra amount you are allowed to deduct is before the tax credits get taken off. For a complete explanation see my blog post

      I hope this answers the question?

      Regards,
      Tim

  40. Lyn says:

    So glad I found you, Tax Tim :)
    Our medical aid savings usually runs out half way though the year, forcing us to pay cash for the rest of our medical expenses, until the new year kicks in. The medical aid tax certificate shows the amounts claimed and not covered by the medical aid, but it obviously does not include our additional cash payments for the rest of the year, since these are not submitted to the medical aid. In the past, we would claim all the extra medical bills not included in the tax certificate, and we would receive a rather substantial tax refund. It made us feel better knowing that if the medical aid didn’t cover all our expenses, we would at least be able to claim back from the tax man. So does this mean we can no longer claim medical bills once our medical aid savings has been used up that we’ve had to pay cash for?

    • Tim says:

      H Lyn,

      Thank you for the compliment and welcome to the TaxTim family!

      Your question is an important one and will affect a lot of people. For the tax season that opens tomorrow and I hope you will be using TaxTim to help complete your 2012 income tax return, you will submit your medical expenses as always.

      Going forward for the 2013 tax year and onwards, SARS will allow you to claim some of these extra expenditures as long as they combined with any amount over 4x the actual tax credit exceeds 7.5% of taxable income. I know that sounds complicated and typical tax jargon, but essentially it is the same as always, just with the added benefits of the tax credit.

      So you will still be able to claim all those medical expenditures that your medical scheme does not cover and all of the out of pocket medical costs too. Unfortunately you may get a smaller deduction in the end, but that is part of SARS’ attempt to even out the system.

      I hope I’ve helped answer your question.

      Regards,
      Tim

  41. mohammed abdulla says:

    Hi,

    I am on my wife’s medical aid and contribute towards her medical aid payments every month. She is under the tax bracket and does not complete a return, can i claim for my portion of her medical aid contributions and if so how can i make the claim

    • Tim says:

      Hi Mohammed,

      You will be able to claim your portion of the amount paid, just as long as only one of you claim. If asked for your tax certificate by SARS, you will show them your wife’s and explain the matter. If her employer pays for this however then you will not be able to claim as her nett salary already takes the contribution into account.

      Regards,
      Tim

  42. bobby says:

    Hi Tim,

    I hope you are well. I am currently unemployed and did not receive any income during the past financial year. My medical expenses are 1,242 per month plus an additional 3,600 (out of pocket). I also paid a total amount of 780 for annuities.

    Is it possible to claim any tax back from these amounts?

    Thank you again for your advice.

    Best Regards

    Bobby

    • Tim says:

      Hi there Bobby,

      Great question!

      You will be able to claim the medical expenses and the retirement annuity contribution, however you will not get a refund, but will carry this claim over to the next tax year to be set-off against any tax you owe that year. So it is definitely worth submitting your return despite, unfortunately being unemployed.

      I hope this helps,

      Regards,
      Tim

  43. Sheri says:

    Hi there,

    I would like to know if I can claim for my expenses on my husbands medical aid as well as on mine when I do my return? He is a foreign national and is unemployed, my son and him are on the same policy in his name and I am on a separate policy but pay in full for both policies. Am I allowed to claim for both policies as I pay for them both from my salary?

    I hope you can help me out with this… Thanks!!!

    • Tim says:

      Hi Sheri,

      Thank you for the question!

      You will be allowed to claim his policy contributions as a deduction. So you would be able to claim your medical aid deduction as per normal with you as the member. You would then claim all his contributions as other medical expenditure not reimbursed by medical aid.

      I hope that makes sense? If not please feel free to let me know and I will go into greater detail.

      Regards,
      Tim

      • Sheri says:

        Thanks so much Tim, that does make sense to me.
        I do have one question regarding it though, in the amount of dependants do I put 1 as I am the only one on my policy or do I put 3 (my husband, son & myself)?

        Thank you so much for your help, have claimed for in previously but was never 100% certain whether I was actually allowed to, thanks for clarifying that for me.

        • Tim says:

          Hi Sheri,

          Great, I’m glad I could help.

          If you are claiming your husband’s medical aid contributions as other medical expenditure then you should only put yourself as the number of dependents, on the medical aid section, because your policy is the one that the Medical Aid deduction will be calculated on. The rest will be subject to another formula.

          Regards,
          Tim

  44. Laniece says:

    Hi Tim

    I have a medical insurance rather than a medical aid which is payed through my company and then I receive my tax credits. But now I called my medical insurance to find out about a tax certificate for my tax return, but they say that it’s a non taxable product as it’s short term insurance. So should I still be receiving the tax credits even though it’s a medical insurance?

    • Tim says:

      Hi Laniece,

      Thank you for a very interesting question.

      Medical insurance does function differently and unfortunately does not qualify you for a tax credit. I wish I could give you better news, however you may be able to claim this as other medical expenditure not covered by medical aid. This is subject to thresholds however and you may not get the deduction. It all depends on the amount.

      Regards,
      Tim

      • Laniece says:

        Hi Tim

        Thanks for the heads up. I have been receiving the tax credits since end of April, so how will that now work in the future? Will my employer now no longer add the tax credits on to my salary?

        • Tim says:

          Hi Laniece,

          Has your employer been paying for the medical insurance?

          Regards,
          Tim

  45. Cabous says:

    Hi Tim,

    For tax year 2013, I earn 41000 a month, my monthly medical aid contributions is 2500 for myself my wife and 3 kids. I pay this privately, it does not reflect on my payslip.
    How much , if any thing, will I get back on assesment ?

    Thank you!

    • Tim says:

      Hi Cabous,

      For the 2013 year you will be entitled to a tax credit of (R230 x 2 + R154 x 3) x 12 = R11 064 This will be for all 5 of you and is based on the allowable tax credits. So at when you file these credits will be taken off what you owe in tax and should reflect as a refund on assessment.

      I hope this helps!

      Regards,
      Tim

  46. CARLA says:

    Good day, I earn R6,000 per month. I pay monthly chronic medication of R850.00. Should I do the taxreturn now on e-filling, how much do you think I will get back from SARS?

    • Tim says:

      Hi Carla,

      Thank you for the question!

      Do you pay the chronic medication out of your own pocket or do you have a medical aid? If out of your own pocket i would definitely suggest completing your return.

      Currently you are paying (R6 000x 12) x 18% = R12 960 – R10 755 = R2 205 in taxes. If you submit your medical claim then you should be able to get all of that back as a refund.

      http://www.taxtim.com will guide you through the process and then even show you how to submit this via eFiling

      I hope this answers your question!

      Regards,
      Tim

  47. Noni says:

    Hi
    I have a son who is autistic he goes to a special school.he is on my husband medical aid and i have read an article here on line which says we suppose to claim for the contribition made by my husband to the medical aid , is that true.how much percentage roughly are we suppose to get from sars when claiming for the school fees, since the Occupationa Therapist and the Speech therapist claim their fees directly from the medical aid how do we claim the money back.

    Thanks

    • Tim says:

      Hi Noni,

      Thank you for the question!

      Your husband can claim his medical aid contributions for your family. You may need to get a doctor’s letter confirming your son’s autism which would then allow you to claim for disability/impairment as well. When you complete your income tax return you would show the the amount spent on medical aid and the the number of dependents. (Assuming your husband’s employer does not pay for medical aid and it comes out of your pockets directly?) The school fees, provided the school is only for children with special needs may be a medical claim, please ask the school about it, they would probably need to register with some authority for this.

      Any other medical expenditure, which your medical aid does not pay for and you pay out of your pocket can also be claimed as a deduction. Depending on what your income level is will determine the how much you can deduct. Always complete your return with the amount and let SARS calculate the rest for you.

      If you use http://www.taxtim.com to complete your return, Tim guides you through the process and asks the necessary question to help complete your return properly.

      I hope this answers your question?

      Regards,
      Tim

  48. Hi Tim : please help, we are on a cash package so all our medical aid contributions are made via the employee, for yrs we have been struggling to claim tax because of this. i fully understand the 2013 tax credit but we need assistance in claiming for this year 2011-2012. how do we claim if our portion as well as the employers portion is paid via the employer. e.g. Income (3810) R2000, Deductions (4005 & 4474) R2000 we have never received a refund for this.

    • Tim says:

      Hi Claudine,

      Thank you for the question, I think a lot of people have this common problem.

      The deduction you currently receive is taken into account when your employer is calculating your employees tax. This results in slightly less tax being paid each month than had you paid the medical aid expense directly out of your own pocket. This usually doesn’t result in any refund or extra tax liability for you. If you have any other medical expenses that your medical aid doesn’t cover these can be deducted however.

      I hope this answers your question?

      Regards,
      Tim

  49. monique says:

    Hi Tim . I am unemployed. My husband pays for my medical and kids. He is not on the medical aid. He pays it privately, its taken off via debit order every month. Can he claim the contributions? The tax certificate we get is In my name as I am the main member? And all the perscriptions he pays to and they are also in my name?

    • Tim says:

      Hi Monique,

      Thank you for the question!

      Yes your husband can claim all the deductions relevant despite not being on the medical aid himself including the medical aid contributions and the other medication. Provided he pays them and you don’t claim them at all if you submit a tax return.

      Regards,
      Tim

  50. Charlene says:

    hi,

    im not on medical aid – can i claim my medical bills ?

    also, my kids are on my dad’s medical aid so he claims for the tax credit.
    but he doesnt claim the unpaid bills of the medical aid such as dr’s bills when the medical aid was finised for the year and the difference at the chemist for medicine which the medical aid doesnt pay for as i pay these 2 bills when we go. Can i claim these bills – since i paid for them ?

    thank you

    • Tim says:

      Hi Charlene,

      You are most certainly able to claim all the medical bills you speak of in your question. You need to insert the total amount (including for your children) into the question which asks about amounts spent not reimbursed by medical aid. This deduction is subject to a threshold of taxable income so that will determine the actual deduction you receive. Just add it all up and put in.

      Regards,
      Tim

  51. Sydney says:

    Hi,

    I don’t have a medical aid benefit from my employer. I pay R1279.00 per month for medical aid and it is deducted through my Bank Account. I’ve received the tax certificate from my medical aid. I would like to know where a m I suppose to include the contributed amount, I filing though efiling.

    I hope my blog will reach your attention.

    Regards

    • Tim says:

      Hi Sydney,

      Thank you for your question!

      On the first questionnaire on eFiling you need to check the box which asks have you incurred any medical expenditure. Then on the page with medical expenditure you tick the first box yes, then a popup will appear. Click NO, then enter the number of members as per your medical certificate, next to the source code 4040 enter in the medical aid contributions for the year and you are done!

      I hope this helps!

      Regards,
      Marc

  52. Berenice says:

    Hi Tim,
    I am so glad that I found your informative blog.
    I am a 66 year old pensioner (with a part-time job). My previous employer pays 100% of the medical aid contribution.
    Last tax year (when I was under 65) the medical aid ‘perk’ was considered a fringe benefit and added to my other income. As I turned 65 during the 2011/2012 tax year, will this year be different?
    I am hoping the fringe benefit tax now falls away as I notice that this year my previous employer has not submitted the IRP5 re medical aid contributions to e-filing.
    Am I being over-optimistic and does the medical aid benefit still get added to my other income even though I’m over 65?
    Kind regards
    Berenice

    • Tim says:

      Hi Berenice,

      Thank you for this question and look out for our next Blog post which will be entirely devoted the tax benefits of being over 65 years old!

      Taxpayers over 65 years of age can currently claim ALL medical aid contributions as well as all other medical expenditure your company will not cover. The fringe benefit could still come into play as by your employer paying for this, you are effectively “earning” income so any portion over your tax benefit will be seen as a Fringe Benefit. However now, it should come in as income and go straight out as a deduction potentially not causing a FB thereby having no tax consequences.

      Just a quick question, has your employer not included any medical aid items on your IRP5 at all?

      Regards,
      Tim

      • Berenice says:

        Hi Tim
        Thanks so much for your help, I look forward to your blog re the kindness of SARS to the over 65’s.
        My previous employer has been taken over by another company in another province. Thankfully the new company has continued to pay the full medical aid contribution of their pensioners but does not send me an IRP5.
        Up to now I haven’t really needed the IRP5 as it has appeared regularly on the efiling page and this is the first time that it has not been visible at the start of the efiling season.
        I pay in (lots of) extra PAYE to allow for the fringe benefit and I like to file my return early so that some of the voluntary additional contribution is refunded to me ASAP! From your reply to me it seems as though I should get the full amount back but I guess I can’t do anything until they send the IRP5 info to SARS.

        • Tim says:

          Hi Berenice,

          I will personally send you that blog post as we have posted it!

          I’m very shocked to read that your employer has not sent the IRP5 to SARS not have you received it either. The worrying thing here is, has the company been paying over your PAYE etc. There is no excuse for companies to not provide their employees with their IRP5′s and worse not to SARS either. If you would like I can follow this up with your employer/SARS? A monthly submission and bi-annual reconciliation has to be performed on PAYE submission.

          You can send me an email on tim@taxtim.com if you need any extra help.

          Regards,
          Tim

  53. Johan says:

    I am busy completing my provisional tax for 2013-01 on efiling and there is no provision made for the medical tax credit on this return form. It should be below tax payable seeing that it is offset against this ?

    • Tim says:

      Hi Johan,

      I’m not sure that SARS knows how they are going to adjust their forms for this yet, my best advice would be to wait until later in August to submit your IRP6 – provisional return. My feeling is they will actually leave the credit until the end of the year’s ITR12, but let’s wait and see. If you want to save some cash for payment in August, do the calculation without the credit and use that as a base for paying over to SARS. It’s the safest.

      Look out for updates on http://www.taxtim.com though because as soon as any changes are made, we will be sure to alert all our subscribers.

      Thank you for the question!

      Regards,
      Tim

      • Tim says:

        Hi Johan,

        SARS, in a recent report, advised the Medical Tax Credit can be shown in the PAYE field, so you would need to include the amount for the credit in there which would then decrease the amount of tax payable.

        Regards,
        Tim

  54. johan says:

    i have earn R233000.00 for the tear and have no medical and spend R12500.00 on private med for my spouse and kid and only reseve R406.00 is that corect

    • Tim says:

      Hi Johan,

      Unfortunately if you don’t have a medical aid you are limited to deducting amounts for medical expenditure which are more than 7.5% of your taxable income.
      So based on your information – R233 000 * 7.5% = R17 475 which is more than you have spent. Can you provide me with any other deductions you may have which would reduce your taxable income and also how much tax have you paid according to your IRP5?

      I hope I can help

      Regards,
      Tim

  55. Dina says:

    Dear Tim,

    Thanks so much for a wonderful site.

    I would like to ask if I pay my Mom’s medical aid from my earnings, my bank account gets debited every month, as she does not earn a living, however she is the principal and only member on her medical aid – am I allowed to claim this on my return?

    My medical aid is paid by my employer so this I have never claimed for so have always added a 0 next to 4040, but for her medical aid contributions?

    And if I am not allowed to claim, as the membership is in her name, is she allowed to claim if I paid it from my bank account?

    I understand you both cannot claim the same thing, ofcourse, but can either of us?

    Hope it makes sense

    Thanks very much

    • Tim says:

      Hi Dina,

      Thank you very much for the kind words!

      The best answer to this question would be for you to claim the medical costs as amounts not recovered from medical aid. Is your mother over 65 years of age or does she suffer from any disability? This would allow you to claim the full amount. If she claims the amount then she will not receive a refund, but carry this amount over each year. If you claim then there is a chance for a refund, depending on the amount.

      I hope this helps?

      Regards,
      Tim

  56. Sonja says:

    My husband received an income of R185036 for the year. Our medical aid is deducted from his salary every month (1234.33). There are 3 of us on this medical aid. Over the year our medical expenses were R3897 paid out of pocket. Is there a way to calculate more or less what the tax payable or tax receivable will be?

    • Tim says:

      Hi Sonja,

      It would all depend on whether or not your husband’s employer pays for all the medical aid or only a part of it. If they pay for all of it then the amount is already included in his PAYE and so the tax has been paid. Unfortunately your out of pocket expenses will not be allowed as a deduction as it is not greater than 7.5% of your husband’s income.

      If that is your husband’s only income was that amount, check the IRP5 on the top right hand side for the amount of tax already paid. If you want to send it tim@taxtim.com I will be able to have a look for you.

      Regards,
      Tim

      • Sonja says:

        The employer paid half of the medical aid and my husband paid the other half. Code 4005 – 24324.00 and code 4474 – 13013.00 and code 4003 – 9020.00

        Another thing I can see with the tax calculation is that the Provident Fund code 4003 doesn’t not pull through it shows a zero on the tax calculation.

        • Tim says:

          Hi Sonja,

          Given that, the tax would definitely have been taken into account when calculating the PAYE each month so there shouldn’t be an extra amount owing for tax when you submit your return. Unfortunately a provident fund isn’t deductible for tax purposes so that is why it doesn’t appear on the calculation. on eFiling, just before you submit, click the calculator button and it will show you whether you are due a refund or not.

          I hope that helps?

          Regards,
          Tim

  57. Marlize says:

    Hi Tim

    My husband is the main member on our medical aid. I am a dependent on our medical aid. I do however pay the medical aid each month via a debit order (R2500 p/m) which runs from my bank account.

    Can I claim back with the tax certificate that was sent to us, even though my husband is the main member of our policy? My husband is under the tax threshold.

    • Tim says:

      Hi Marlize,

      As long as only one of you claim the medical expense and you appear on the tax certificate you may show the deduction for medical expenditure. You must claim for both of you though and not split it up.

      Happy filing!

      Regards,
      Tim

  58. Ali says:

    Hi Tim

    I earn R11 906-00 basic salary. My medical aid (total amount0 is R1 5477-77 of which my work pays R1 014-00 an I pay R546-00 out of my pocket for my medical aid every month.

    With the new new MTC that kicked in in March 2012 is it correct if I am now paying R219-39 less on tax?

    • Tim says:

      Hi Ali,

      Thanks for the question!

      It all depends on the number of members and dependents on your medical aid? Does your basic include your employer’s medical aid contribution or is that after?

      I’ll be able to answer once I know those that information.

      Regards,
      Tim

  59. Ali says:

    Hi Tim

    Ok let me give you some clarity on above question.
    I earn R11 906-00 gross salary with the medical aid subsidy from employer already added on. I am the only member on my medical aid.

    The total medcial aid fee is R1 560-00 of which the employer pays R1 014-00 and I pay R546-00.

    What reduction shuld I be seeing in my tax?

    • Tim says:

      Hi Ali,

      Based on the information you will be paying R11516.96 for the 2013 season as opposed to R13406.76 so a saving of R1889.8 due to the new tax credits and higher minimum threshold for taxpayers. This will be on an overall basis at year end provided your income stays the same and you have no other expenditure you can claim.

      Remember this is just an estimate based on what you have told me. If you’d like more detail on these figures please let me know and I would be more than happy to email you the breakdown.

      Regards,
      Tim

  60. anita says:

    hi tim.
    If my medical expense was R9020 no medical aid. Yearly income R219 000 how much will i get for 2012 taxyear
    anita

    • Tim says:

      Hi Anita,

      Unfortunately unless you are over 65 years of age or are impaired/disabled you won’t be able to claim your medical expenditure. SARS only allows you to claim any amounts greater than 7.5% of your taxable income – so in your case any expenses over R16 425.

      I wish is had a better news for you.

      Regards,
      Tim

  61. Noeline says:

    Hi Tim,

    Could you assist with some help in my case. I have been unemployed since June 2010 this tax year is the first return that I have to complete with very little if any information to be populated on efiling. (at his point in time I will not be returning to employment for a couple of years) However my husband works and we pay our medical contributions privately every month. According to his tax consultant due to me being the main member my husbande is not able to record the medical information on his return and that I should be completing it on my personal return. I have just completed filing the return, but seems a bit strange that a person who is unemployed is contributing this huge amount to medical yearly (supporting documentation was requested and medical tax certificate was uploaded). So my question would be is there any possibility that we will get any kind of refund based on our case, would SARS link my details to those of my husband and see that he earns the income but does not claim the medical portion? Thanks for your assistance

    • Tim says:

      Hi Noeline,

      The only benefit you are going to have here is when you do start working again and the “loss” from these years will be offset against your eventual income. If there is anyway you could make your husband the main member of the medical aid this would then allow him to make the claim. Unfortunately SARS, and I think they should do so, doesn’t take into account who the income earner is for these purposes.

      I wish I had better news for you, but the only saving grace would be when you do start working you may have your tax reduced in those years.

      Regards,
      Tim

  62. G says:

    Hi Tim, say for example if I am filling in an amount of R5000 in section 4040 which reflects on my medical certificate as ‘Claims not recovered from the scheme’, when I use the calculator should I not be expecting to see at least some of that R5000 refunded. Currently I am breaking even.

    • Tim says:

      Hi G,

      Thanks for the question!

      SARS allows a deduction for claims not recovered from the scheme only if the amount is greater than 7.5% of your taxable income. This is the amount after you have taken all your income and subtracted all your allowances/deductions. You then multiply this by 7.5% and any amount over that spent on these medical expenses will be allowed as a deduction. So only if your taxable income is less than R66 666 for the year will you be allowed any of the R5 000 extra expenditure.

      I hope this helps answer your question?

      Regards,
      Tim

  63. Mr H says:

    Hi Tim
    I earn a salary of R14 000 and want to know what the tax on this amount is.

    Also this months’s salary was R25 000 due to R11000 commission, please let me know what the tax must be

    • Tim says:

      Hi Mr H,

      Your employer will deduct R1 613 + Unemployment Insurance Fund Contributions of 124.78 for the R14 000 each month.

      This month’s salary of R25 000 will incur Pay-As-You-Earn of R4 577 + UIF of R124.78

      Due to you earning commission this amount will change each month so if you want to check what your monthly after PAYE & UIF earnings will be try our salary tax calculator

      I hope this helps!

      Regards,
      Tim

  64. Chris says:

    Tim , If I pay R 30 000 for an op on my employee(no medical fund) how much of it will be tax deductible in my hands?
    Thx. Chris.

    • Tim says:

      Hi Chris,

      To qualify as a tax deduction for the business you will need to include that amount in the income of your employee and they will be taxed on it. SARS will only allow you to claim a business expense if someone if someone is being taxed on the other side. So you would include this amount as Fringe Benefit for your employee using source code 3813 on their payslip. You will then have a business cost for staff costs and can claim the full deduction. Your employee will be taxed unfortunately, but it will be at his marginal rate of tax which is certainly less than the full R30 000.

      I hope this helps?

      Regards,
      Tim

  65. Warren says:

    Hi Tim

    If i pay my medical privately, can i give my employer the details (ie the medical contributions i pay and the mumbers of members on the scheme) so that they can calculate my medical tax credit and thereby reduce the tax i pay and i get more out every month by the value of the tax credits? or do i need to put this through my tax return as i would have done in previous years?

    thanks

    Warren

    • Tim says:

      Hi Warren,

      Unfortunately the PAYE is deducted as employee’s tax. Your medical contributions being private would not reduce employees tax, as this is based on your remuneration. The definitions get quite technical and it would also cause a bit of an accounting mess on the side of your employer so unfortunately you would have to wait until year end to include this in your tax return.

      If you can get your employer to pay this on your behalf or have him deduct it from your salary each month then you can claim the credit when you calculate your PAYE.

      Regards,
      Tim

  66. Elanor says:

    Good day Tim

    I started working March 2011 and in earning more or less 54k per annum, my medical aid as well as medical expenses the medical aid did not cover for the past tax year was around 26k.

    Can you please help me with more or less what I am looking at?

    Thanks

    • Tim says:

      Hi Elanor,

      Luckily you won’t have to worry, your earnings are under the tax threshold which means you won’t even have to submit a tax return as you have not paid any tax! As soon as your earnings exceed R63 556 per annum then you will start paying tax. Your employer will deduct this from your monthly salary. Depending on who pays your medical aid and the rest of your medical expenditure, you may even be able to get some of the tax you will pay, back, once you start earning above the threshold.

      Regards,
      Tim

  67. Meg says:

    Hi Tim

    I have been medically boarded and receive a monthly pension of R3000 pm. I have retained my medical aid and my contributions are R350 pm for myself, husband and two children. My husband gives me funds to pay this. Can he claim back these contributions from SARS?

    • Tim says:

      Hi Meg,

      Does your husband pay the full amounts for the family? Ideally if you are the main member then you should claim this, however it is practice that if your husband is supporting all of you then he can claim the medical deduction in his return, as long as only one of you make the claim..

      Regards,
      Tim

  68. Heloise says:

    Good day,

    I earn R8200 after deductions, so R8800 before deductions, I pay a total of R2609 per month for my medical aid, it is for me, my husband and 2 kids. What amount will be refunded?

    Thanks a lot

    • Tim says:

      Hi Heloise,

      Assuming you pay the medical aid out of your own pocket then you would be entitled to (R720 +R720+R440+R440) = R2 320 per month as a deduction * 18% (marginal tax rate) = R417.60 per month and therefore R5011.20 as a refund for the year.

      Regards,
      Tim

  69. Mossie Mostert says:

    If I understand correctly it means that persons receiving an income less than R6300 and not paying tax will not benefit from this tax credit. Hope I am wrong.
    My son earns R2800.00 pm. His medical contribution is R485.oo. The company does not contribute anything towards the medical aid although the medical contributions is paid over on his behalf by his employer.

    How will he benefit from this tax credit?

    • Tim says:

      Hi Mossie,

      Thanks for the great question!

      Your son, although he is below the taxable threshold and doesn’t pay tax, would only be able to benefit from the tax credit once he begins to earn above the taxable threshold. SARS have said that the medical tax credit of R230 per month cannot be used to earn a refund, but just lowers the tax paid if you do pay. Since your son does not pay tax the medical credit will not apply to him.

      I wish I hada better answer for you.

      Regards,
      Tim

  70. Elize says:

    Dear Tim,

    My mom and dad (72 & 80 years of age)have their own medical aid. However, every month I pay the total monthly premium of the medical aid into their account, because they don’t have money to pay it themself. Am I allowed to claim this on my return?

    Hope it makes sense

    Elize

    • Tim says:

      Hi Elize,

      As your parents seem to be dependent on you for the medical aid expenditure, you would most certainly be able to claim this amount on your return. Just to clarify, they aren’t on your medical aid?

      Regards,
      Tim

      • Elize says:

        Tim

        No, they have their own medical aid. I pay the exact premium of the medical aid each month into their bank account where the debit order is loaded.

        How do I claim it back? Must I register them as dependants, or do I only count this amount with my own medical expenses?

        Thanks
        Elize

        • Tim says:

          Hi Elize,

          You will be able to claim the medical aid costs for them. So on your tax return you will include them in the number of members and you will then fill in the amount spent on their medical aid next to source code 4040. If your employer doesn’t pay for your medical aid then you will add yours there as well, otherwise just put their expenditure.

          I hope this helps?

          Regards,
          Tim

  71. Natalie says:

    Not sure how this new credit and refund system works. If my gross salary is R12000 and the company pays my full portion of medical aid on my behalf of R3779.00 which includes myself, spouse and my son.How would you calculate my credits and how does that effect my payslip every month

    Thanks

    • Tim says:

      Hi Natalie,

      The new credit will take the form of an amount being taken off your PAYE each month in the event that your employer pays for your medical aid. So for you, your spouse and son, there would be a credit of R230 +R230+R154 per month (R614). The first two members are allowed a credit of R230 per month and thereafter R154 per month. The PAYE tables don’t take this into account, but it should be deducted from the table amounts. Assuming your Gross salary includes the medical aid payment then the PAYE would be – R1 386.66 less the R614 per month. This would be the PAYE withheld and paid over to SARS each month.

      I hope this answers your question.

      Regards,
      Marc

  72. Phil says:

    Hi Tim,

    I have a question about IRP5 recon with tax credits. I manage our tax aspects in a very small company (two employees). One of our employees pays medical aid out of his own pocket (i.e. it is not part of his salary package or paid by the company), but what we do is take this medical aid deduction (the tax credits) into account for the PAYE we deduct from him per month; so let’s say that his normal PAYE is R6330 (as per his taxable income) and then we deduct R230 (he is the only member on his MA) to give PAYE of R6100. This (R6100) is what we pay over to SARS every month (together with other aspects such as UIF, etc. of course) and what I put on the IRP5. Now with the IRP5 recon, I phoned SARS and they said that you do not capture tax credits on the IRP5 form unless the company pays the employee Medical Aid contributions (there cannot be a 4116 code unless there is a 4005 code). So I am guessing that this employee must then fill in these tax credits on his IT12 form when that time comes, but won’t this double credit him (since the PAYE as per the IRP5 is already taking the tax credits into account); or must he just leave out on his IT12 form? If he fills it under “medical aid contributions not reflected on IRP5”, then won’t this double credit him (seeing as the PAYE on the IRP5 entails the tax credit); or will SARS make some section that accommodates this scenario (or will its calculation systems pick this up and correct it)? Is it correct to do it like we do it, by already taking off the medical aid credits from his PAYE even if the company does not pay his contributions? I mean at the end of the day, we are deducting the correct amount of PAYE from him; I just want to make sure that the admin process is correct. Your assistance is greatly appreciated, thank you. If you have further questions regarding my query, please ask.

    Kind Regards,
    - Phil

    • Tim says:

      Hi Phil,

      SARS have not confirmed what to do in a situation on such as yours as there is no specific code for employee paid Medical Aids. You are quite right that on assessment when the employee submits his return there could be a double tax credit because the “employee tax credits” will already have taken this into account. The solution there would be to leave it out of the ITR12 altogether. However this wouldn’t be correct tax compliance.

      Another problem is that when you submit the monthly EMP201′s to SARS, the salary paid reflects a certain amount and as per the tables there is a calculated PAYE amount. When SARS does their reconciliations they will attempt to match the remuneration to the PAYE and this will not match. The definition of net remuneration includes any payments made by the employee/employer for things like Medical Aid so there is going to be a mismatch at some point.

      Going forward I would suggest that you do not deduct the R230 from the PAYE amount and let the employee claim this on assessment, this is the easiest solution as SARS are likely to audit the employee on assessment next year and again there will be a mismatch in their tax certificate and what the correct calculated amount is. If you do it like this and the employee only declares the Medical Aid for half the year it would work out to the same amount for him from a tax perspective.

      The easiest to do would probably request a correction of your EMP201′s and make the change there to correct it by not reflecting the R230 per month. In this way, at assessment, the employee won’t have any issues.

      Let me know if you have any more questions?

      Regards,
      Tim

      • Phil says:

        Thank you Tim,

        I appreciate you taking the time to answer my question and confirm my understanding of the situation. I’ll see what I can do about the situation.

        -Phil

  73. Ann van Rooyen says:

    Hi Tim,

    I earn R18 800 per month before paye & uif deduction. My medical aid is paid separately by myself to Discovery. This is R2397.00 per month. This is for myself, my spouse & my son. Therefore the tax credit will be R614.00 per month. My paye deduction is R2850.00 per month My question is … Do I deduct the R614 from my monthly paye and only pay over R2236.00 per month or do I continue paying the full R2850 per month and claim the tax credit for medical only at the end of the tax year??? Thanks for a great site.

    • Tim says:

      Hi Ann,

      Thanks for the question!

      Your employer will pay over the PAYE and UIF and won’t take your medical expenditure into account as you pay that separately from your own bank account and does not form part of your salary. So in your case you will only be able to claim the tax credit at the end of the tax year when you file your 2013 tax return. Although this obviously means you are R614 shorter each month, you will have a nice refund at the end of the next tax year:)

      Glad you are finding our site useful!

      Regards,
      Tim

  74. Deon says:

    Hi Tim

    My wife and I currently have our own separate medical aid “account”
    We each contribute R1800 a month towards our medical aid.

    We are going to be going onto one medical aid “account” and I will then have 1 dependent on my medical aid.

    First question

    Will I be able to attain the credit the is mentioned above and will I possibly get money back? I am in the upper tax bracket earning 375 k plus a year.

    Second question

    Will my wife be paying more tax when she stops paying medical aid and I take over the payments as she will be on mine?

    Regards Deon

    • Tim says:

      Hi Deon,

      Thanks for your question!

      To answer your two questions at once, as you will be making the claim for medical expenditure you will be entitled to the medical tax credit for you and your wife regardless of your tax bracket. Your wife unfortunately will no longer be able to claim the expenditure and so yes in theory she will be paying more in tax (most likely a smaller refund).

      The new medical tax credit is designed to even out the benefit taxpayers receive from having private medical schemes and so unfortunately you will both actually be “worse” off due to your income bracket, but still receive a credit each month of R460 against your tax liability.

      Regards,
      Tim

  75. Dion says:

    Hi Tim

    I am currently e-filing my tax return for 2012. I am hoping you can advise me with the following?
    I current pay the medical aid premuims (comes off my debit order) for my mum, and both my inlaws. THey are all on state pension and cannot afford this cover, so I do it.

    Am I able to claim this as a deduction? If yes, against what code?

    My family (wife and son) has a seperate cover, not linked to our parents cover.

    You advice will be appreciated

    Regards

    Dion

    • Tim says:

      Hi Dion,

      You will be able to claim this deduction as they are dependent on you for medical cover. If they are all on your medical certificate, then you would include this amount along with yours in the medical section of the ITR12 Income Tax Return. If you pay separately for them then you would include the number of people within the dependents asked on the return and include the premiums next to source code 4040 on the medical section of your ITR12 Income Tax Return.

      I hope this answers your question?

      Regards,
      Tim

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