CAMAF Member Option Guides & Info

Guide on the Determination of Medical Tax Credits (Issue 9) 25 Calculation of AMTC A = R42 000 (contributions to a medical aid or fund) B = R14 616 (MTC) C = R14 866 (qualifying medical expenses) D = R298 000 (represents taxable income - excluding any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) Formula to calculate AMTC: AMTC = 25% × {[A – (4 × B)] + C] – (7,5% × D)} = 25% × {[R42 000 – (4 × R14 616)] + R14 866] – (7,5% × R298 000)} = 25% × [(R42 000 – R58 464)* + R14 866] – R22 350 = 25% × [(R42 000 – R42 000) + R14 866] – R22 350 = 25% × (R14 866 –R22 350) = 25% × nil = R nil * This amount is limited to R42 000, as it can never exceed the actual contributions paid. Notes: 1. The amount of R18 000 paid by the employer for the employee's benefit represents a taxable benefit under paragraph 2(j), read with paragraph 12B. This amount must be included in gross income. An AMTC may not create a refund prior to the offset of employees' tax and provisional tax, since it is not a deduction, but a tax rebate. Note that, when determining the AMTC, an assessed loss brought forward from a previous year of assessment must first be set off against the taxable income of the current year of assessment before calculating the 7,5% limitation. Example 17 – Claim for physical impairment expenditure Facts: During the 2018 year of assessment, X (aged 38) earned a salary of R280 000 (excluding any taxable benefits). X contributed R42 000 towards ABC Medical Aid Scheme. X's employer paid R18 000 of the R42 000. X's employer withheld employees' tax of R39 004 from X's remuneration of R298 000 (R280 000 + R18 000), after accounting for the MTC. All amounts were correctly reflected on X's IRP5 certificate, and X was not entitled to any exemption or deduction during the 2018 year of assessment. X is claiming allowable out-of-pocket medical expenses of R14 866 as well as R9 450 incurred and paid for over-the-counter medication because of a physical impairment (the qualifying expenses appear on the prescribed list). X has kept proof of all expenses. X is the main member on ABC Medical Aid Fund and has two dependants – a spouse and one child.

• Cover
• Preface
• Glossary
• 1. Background
• 2. Part A – Section 6A rebate (medical scheme fees tax credit)
• 2.1 Qualifying persons for whom contributions may be claimed
• 2.1.1 Meaning of a "dependant"
• 2.2 Person paying the contributions
• 2.2.1 Contributions paid by the taxpayer
• 2.2.2 Qualifying contributions
• 2.3 Medical scheme fees tax credit
• 2.4 Amount of medical scheme fees tax credit to be deducted from tax due
• 3. Part B – Section 6B rebate (additional medical expenses tax credit)
• 3.1 Background
• 3.2 Qualifying persons for whom expenses may be claimed
• 3.2.1 The meaning of "dependant"
• 3.2.2 The meaning of "spouse"
• 3.2.3 The meaning of "child" for purposes of the additional medical expenses tax credit
• 3.3 Qualifying medical expenses
• 3.3.1 Expenditure incurred inside the Republic
• 3.3.2 Expenditure incurred outside the Republic
• 3.3.3 Qualifying disability expenditure
• (a) Prescribed diagnostic criteria for a disability
• (b) Confirmation of disability (ITR-DD form)
• 3.3.4 Expenses relating to a physical impairment
• 3.4 Timing of claim for qualifying medical expenses
• 3.5 Contributions and qualifying medical expenses deemed to be paid by the taxpayer
• 3.6 Amount of additional medical expenses tax credit to be deducted from tax due
• 3.6.1 Taxpayers aged 65 years and older
• 3.6.2 Taxpayers with a disability
• 3.6.3 Taxpayers under the age of 65 without a disability
• 4. How to claim the medical scheme fees tax credit and additional medical expenses tax credit
• 4.1 Persons registered for income tax
• 4.2 Persons not registered for income tax
• 5. How to object to the disallowance of an medical scheme fees tax credit or additional medical expenses tax credit
• 6. Other information
• 6.1 Relief of customs and excise duty on a motor vehicle adapted for a physically disabled person
• Annexure A – The law
• Annexure B – The prescribed list of expenditure