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How do the medical rebates work?

Posted 9 February 2013 under Tax Q&A


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I was wondering if u can maybe assist me.
I?%u20AC%u2122m studying payroll and sars returns, I have an old text book with the old medical aid rates of 720 & 440. I hav a question where I have to calculate the taxable value of medical aid. The question reads, The following tax rebates apply to medical fund contributions: R230 for sole member, R230 for first additional dependent, an additional R154 is allowed as a REBATE for each additional dependent other than the first dependant.

Question: G.Snel(49) has 4 dependants and his monthly contribution paid to medical aid is R3961. Calculate his taxable value of medical aid?

I would appreciated your help.

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TaxTim TaxTim says:
10 February 2013 at 22:43

The old textbook refers to the deductions up until the 2012 year. For 2013 and beyond there is a new regime whereby a pure tax credit is given. So instead of there being a deduction before taxable income is calculated, the credit is given against the actual tax payable.

So to answer the question, which I must admit is ambiguous as the whole value would be taxable, just dependent on the regime.

1. So 2 x R230 x 12 3 *R154 x 12 = R11 064 would be allowed as a tax credit each year.

2. If the tax credits (230 230 154 154 154) in this case multiplied by 4 is greater than the monthly contribution then this difference would be allowed as a deduction provided this difference exceed the 7.5% threshold of the taxpayers taxable income.


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