Over the next few weeks Pay Solutions are going to discuss Medical Aid Credits, today we are looking at the background.
BACKGROUND OF MEDICAL AID CREDITS
As a rule, expenditure of a domestic or private nature is not deductible for tax purposes. However, an individual’s ability to pay tax may well be adversely affected by costs incurred as a result of illness or disability.
- For this reason, the Act provides a certain degree of relief for medical and physical impairment or disability expenditure paid by the taxpayer.
- In an effort to achieve greater equality in the treatment of medical expenses across income groups, the previous allowance for medical scheme contributions (which was limited to a prescribed capped amount) was, for taxpayers below the age of 65, replaced by an MTC.
- This became effective on 1 March 2012, which is the commencement date of the 2013 year of assessment for individuals.
- The taxpayer is entitled to claim an MTC if contributions are paid to a medical scheme.The taxpayer may also claim an allowance for other qualifying medical expenses.
- Medical expenses may therefore be divided into two distinct categories, namely –
- (i) contributions paid to a medical scheme; and
- (ii) other qualifying medical expenses (including out-of-pocket expenses)
Next week we will be discussing ….What is Medical Scheme Fees Tax Credits? Join us for this series and find out exactly how medical aid credits work
Disclaimer: The information published in this article or newsletter is of general nature and should not be used without obtaining specific advice as to its application in your business or under your specific circumstances. Pay Solutions will accept no liability if the information is used without first obtaining specific advice from one of our consultants.