Tax claim for medical costs
HEALTHCARE: HOW SARS CREDIT WORKS CAN RESULT IN SOME MUCH-NEEDED RELIEF
Not all out-of-pocket healthcare expenses will qualify for a tax rebate.
Claiming medical expenses from South African Revenue Service (Sars) is not as difficult as it might appear, and understanding how it works can result in some much-needed tax relief.
The Medical Schemes Fees Tax Credit is applicable to any taxpayer that contributes towards a registered medical scheme and includes several components and formulas that work together to provide a tax credit that is deducted from your overall tax liability. Here’s how it works.
Medical aid contributions
The Medical Schemes Fees Tax Credit provides for a standard monthly credit against your tax owing to Sars.
As the primary medical aid member, you are entitled to a medical tax credit of R332 for the 2021/2022 tax year as well as a medical tax credit of R332 for the first dependant.
Thereafter, you will receive a tax credit of R224 per month for every other member registered on the same medical scheme.
These credits will be deducted from the tax you are liable to pay, although it is important to obtain a tax certificate from your medical aid for tax filing purposes, keeping in mind that this certificate will also be used to determine any amounts you paid towards healthcare costs which were not covered by your medical aid.
If you are employed and your medical aid contributions are paid via payroll, your employer may use the Medical Schemes
Fees Tax Credit to reduce your monthly tax.
On the other hand, if you pay your medical aid premiums in your personal capacity, you can claim the tax back as a refund when you file your tax returns.
It is important to remember that the tax rebate only applies to taxpayers who are members of a registered medical scheme in South Africa in respect of qualifying dependants as listed by Sars. Qualifying dependants include:
A spouse, including same-sex partners;
A child, a child of a spouse, stepchild or adopted child who was alive during any part of the year of assessment;
A parent, sibling, parent-in-law, grandparent, or any other family member who relies on you for financial support; and
Any other person recognised as a dependant by your medical scheme.
Additional medical expenses
In addition to providing credits in respect of medical aid contributions, Sars also provides credits for excess medical expenses which include, (a) excess medical aid contributions, and (b) qualifying medical expenses by way of Additional Medical Expenses Tax Credit.
(a) Excess medical aid contributions
Calculating your excess medical aid contributions is formula-based and depends on your age and whether you have a disability.
(b) Qualifying medical expenses
In addition to credits for your excess medical aid contributions, you can also get credits for out-ofpocket medical expenses that were not covered by your medical aid.
Where you submitted these expenses to your medical aid, but they were not paid by the fund, these amounts will appear on
your tax certificate. If you did not submit them to your medical aid, you will need to keep a record of these costs for tax purposes.
To make the process easier for e-filing purposes, it is often easier to submit all your medical expenses to your medical aid, even if your benefits are depleted. In this way, all your out-of-pocket expenses will reflect on your medical aid tax certificate.
Keep in mind that not all outof-pocket healthcare expenditure will qualify for a tax rebate. Specifically, over-the-counter medication that can be obtained without a prescription does not qualify in this regard. According to Sars, only the following out-ofpocket costs will qualify:
Consultations, services and medications from a registered medical practitioner, orthopaedist, physiotherapist, chiropractor, herbalist, homoeopath, optometrist, osteopath or naturopath.
Care at a patient’s home by a registered nurse, nursing agency, midwife or nursing assistant.
Medication prescribed by a registered physician and dispensed by a registered pharmacist.
Admission to a registered hospital or nursing home.
Medical expenses or services received abroad that are in line with the above.
Money paid towards the treatment of a physical impairment or disability (see below).
To calculate your additional medical expenses, the formula used will apply as follows:
Under age 65 without a disability
If you fall into this category, the formula used to calculate your additional credits is your total contributions to your medical aid less 4 x your medical scheme fees credit plus qualifying medical expenses. Then subtract 7.5% of your taxable income and multiply this figure by 25%.
Under age 65 with a disability If you are under age 65 with a disability, your credits are calculated as 33.3% of all qualifying medical expenses paid by the individual plus the amount by which the total medical scheme contributions exceed 3 x medical scheme fee credits.
Over age 65 with or without a disability
Regardless of whether you are disabled or not, if you are over the age of 65, your additional credits will be calculated at 33.3% of qualifying medical expenses plus the amount by which medical scheme contributions exceed 3 x their medical scheme fee credits.