Tax-paying South Africans who contribute to a registered medical aid scheme are eligible for a fixed monthly rebate on their scheme fees.
In addition, SARS provides tax relief on out-of-pocket medical expenses in the form of the Additional Medical Expenses Tax Credit (AMTC).
Here’s what you need to know about how to claim Additional Medical Expenses Tax Credit in South Africa.
AMTC covers portion of costs
The AMTC is a non-refundable rebate that covers a portion of the costs, relating to the taxpayer and his or her dependants, that are not paid by, or claimed from, medical aid in the year of assessment.
It also provides an additional reduction on taxes in respect of excess medical aid contributions.
The size of the rebate is dependent on age and whether the tax payer or a family member is living with a disability.
What constitutes a disability?
According to SARS, a disability is a moderate to severe limitation that impairs a person’s ability to function.
It can be physical, mental, intellectual, sensory or communicative in nature but it must be diagnosed by a registered medical practitioner. It must have lasted for at least a year.
An ITR-DD Confirmation of Diagnosis of Disability form must be completed by the attending doctor and submitted to SARS.
Which medical expenses qualify for AMTC?
Qualifying out-of-pocket medical expenses relate to:
- fees charged by registered medical professionals, including dentists, optometrists, homeopaths, naturopaths, herbalists and osteopaths
- fees charged for home-based services by a qualified nurse, midwife or nursing assistant
- prescribed medication dispensed by a registered pharmacist
- medical costs charged for treatment rendered outside South Africa.
How to calculate the Additional Medical Expenses Tax Credit
There are three formulas depending on age and disability.
1. Taxpayers aged 65 and older (with or without disability):
33.3% of the total medical aid contributions minus 3 x the medical schemes credit plus the qualifying out-of-pocket medical expenses.
2. Taxpayers under the age of 65 (with a disability):
33.3% of the total medical aid contributions minus 3 x the medical schemes credit plus the out-of-pocket medical expenses.
3. Taxpayers under the age of 65 (with no disability):
25% of the total medical aid contributions minus 4 x the medical schemes credit plus the out-of-pocket medical expenses minus 7.5% of taxable income.
In this scenario, a disability relates to one suffered by the taxpayer and main member of the scheme, a spouse or child dependant.
How to claim the AMTC
Once the AMTC has been calculated for the year of assessment, the credit is entered on the individual’s ITR12 income tax return under the rebates section.
What supporting documents are required?
SARS may request documents to validate the calculations relating to the medical tax credit, such as:
- proof of contributions paid to the medical aid scheme
- a statement from the medical aid featuring the total amount of claims not paid by the scheme
- a list of qualifying out-of-pocket expenses, together with the relevant invoices and receipts.
How IFC can help
At IFC, we offer informed, objective advice about claiming Additional Medical Expenses Tax Credit in South Africa.
We can assist you in joining the scheme that best suits your needs and budget. Contact us for more information or to discuss your needs.
