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Medical Expenses

Do you feel as though your monthly medical expenses are consuming and exhausting your income? With the rising costs of medication and medical aid premiums, this could have a financial strain on your disposable income.

 If you are a registered taxpayer and earn taxable income, you are entitled to claim back valid medical expenses that have been incurred and if you contribute towards a registered medical scheme you are also entitled to claim back the rebate.

Now let’s take a look at what benefits apply:

1. Medical aid contributions – The main contributing member is allowed to claim back a monthly rebate for himself/herself and other members of the family that are paid for by the main member. SARS regards this rebate as a “Medical Scheme Fees Tax Credit”. For the 2021 tax year the main member is entitled to claim R 319 per month, the first dependent also R 319 per month and any additional dependents R 215 per month.

• Additional medical expenses – Out of pocket medical expenses are regarded as those “qualifying expenses” that are paid by you and have not been reimbursed or paid by the medical aid. Examples of these expenses that SARS will allow are as follows :

• Professional services and medication supplied by a registered medical practitioner, dentist, optometrist etc.
• Expenses relating to a nursing home/hospital or a registered nurse for services in respect of the illness of the main member or dependent.
• Over the counter medication such as headache tablets and cough syrup are not regarded as qualifying expenses.
• Expenses relating to disability. If the main member or any of the dependents have a disability, SARS allows medical expenses in the form of an additional tax credit to be claimed. In order to qualify for this deduction, an ITR-DD form (confirmation of a diagnosis of disability) is required to be completed by a registered medical practitioner.

Calculation principles for the different age categories can be summarised as detailed below :

Younger than 65 years – Excess contributions and other qualifying medical expenses may be claimed as an additional medical expense tax credit calculated as follows :

(medical aid contributions – (medical scheme fees tax credit × 4) + other qualifying medical expenses) exceeds 7,5% of the taxable income, divided by a factor of 4.

  65 years and older, or younger than 65 years if the taxpayer or an immediate family member has a disability – Excess contributions and other qualifying medical expenses may be claimed as an additional medical expense tax credit calculated as follows :

 (medical aid contributions – (medical scheme fees tax credit × 3) + other qualifying medical expenses)  divided by a factor of 3.

An example regarding additional medical expenses claimed can be explained as follows :

A taxpayer, 65 years or older, who contributed towards medical aid for himself and his spouse for the full tax year and incurred additional medical expenses amounting to an estimated R 26 000 that was not covered by the medical aid. After using the SARS based formulae used to calculate the additional tax credit the taxpayer could qualify for an additional R 15 000 medical expense tax credit.

In order for the above to be accepted by SARS, tax invoices together with payment confirmations must be retained by the taxpayer.

For further information/queries relating to medical deductions do not hesitate to contact the 118 team at admin@118accounting.co.za.