The Momentum HealthSaver is a savings account which works with your medical aid and allows you to save for additional medical costs which are not covered by your medical aid.
When it comes to filing your annual tax return, there seems to be some confusion around how your monthly payments to the HealthSaver, as well as medical costs paid from the HealthSaver, are treated for tax purposes.
Momentum Tax Certificates
It is important to point out that Momentum will issue you with two tax certificates at year end – the one is your ‘Tax Information Sheet’ which reflects details of your medical aid contributions as well as details of amounts you have claimed, and the other, is your ‘HealthSaver Tax Information sheet’ which reflects details of medical expenses that have been paid for by the HealthSaver account.
The ‘Tax Information’ sheet (not the Medical HealthSaver) is the important one that you need to use to complete the medical section of your tax return. The total contributions for the year will appear on it. You must enter the total amount next to source code 4005. The ‘total claims not paid by the scheme’ will also appear on it. You must enter the total amount next to source code 4020.
Contributions to the HealthSaver
Even though the monthly contributions you make to the HealthSaver account may be included with your medical aid contributions and reflected next to source code 4005 on your IRP5, they do not form part of your medical aid contributions and SARS will not take them into account when calculating your medical tax credit.
For example, let’s assume your Momentum medical aid contributions are R5 000 per month and you contributed an additional R1 200 per month to a Momemtum HealthSaver account.
The total deduction on your IRP5 next to source code 4005 will be R74 400 (R5 000 x12) + (R1 200 x 12).
The total medical contributions on your Momentum Medical Aid Tax Certificate will be R60 000. SARS will use the amount of R60 000 when they apply the formula to work out your Additional Medical Credit. The monthly amount of R1 200 will not count towards your medical tax credit.
For more on medical expenses and how they impact your tax, please read our blog here.
Medical Expenses paid from your HealthSaver
If you claim for expenses which are not reimbursed by your medical aid, these expense may be paid from your HealthSaver account. You will notice that these expenses are included in the ‘member’s responsibility to pay’ column on your ‘Tax Information Sheet’. They will form part of the total amount to be declared on your ITR12 next to source code 4020 (i.e medical expenses paid by you that were claimed from the medical aid and appear on the medical aid tax certificate).
These expenses paid for by the HealthSaver, will ALSO appear on the HealthSaver tax certificate. It’s important to understand that these are a duplicate of what appears on the Tax Information Sheet. For this reason, you must NOT record the HealthSaver amount again as part of source code 4020 or as additional out-of-pocket expenses (4034) because you will have already recorded them.
If you do have any other out-of-pocket expenses which you did not claim for from the medical aid, then you can claim these in your tax return as qualifying expenses not reflected on any medical certificate (4034).
Momentum Tax Certificate: Tax Information Sheet
This certificate must be used to complete the medical section of your tax return. You will see amounts to be used for source code 4005 and 4020. The details in the block add up to R22 917 which is the amount reported for for 4020.
Medical HealthSaver certificate
This certificate contain duplicate information which is already included on the Tax Information Sheet. The amount in the block contains the same details as the block in the certificate above. The amounts from this certificate must not be included in your ITR12.