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Medical tax deductions explained in simple language

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Update: Article updated for the 2018, 2019 and 2020 tax year.

The focus in the explanation below is on a person without tax knowledge that would simply like to understand what they are allowed to deduct for their tax.

All the amounts used below are for the 2018 tax year, i.e. 01/03/2017 – 28/02/2018.

The first allowable deduction is for any contributions you make to a registered medical aid. The deduction system consists of a tax credit that you receive to deduct from the amount of tax you have payable for the relevant tax year.  If, for example, you had to pay R5 000 tax for the year you will now receive a tax credit, say R1 000, which you can deduct from the R5 000. Therefore the tax payable is now only R4 000.

Not important to remember (but you will sound smart with your colleagues and friends), this deduction is called the Section 6A medical scheme fees tax credit.

2018 Tax year (01/03/2017 - 28/02/2018)

Let us examine how the Section 6A medical scheme fees tax credit for the 2018 tax year (2019 below) is determined.

Assuming the taxpayer is below the age of 65 and there is no member on the taxpayer’s medical aid with a permanent disability (in the case of the taxpayer being older than 65 and or disability involved the amounts and rates will differ):

For each month of the tax year that the taxpayer (main member) have belonged to a medical aid you get a tax credit of R303.00. If a taxpayer has any dependents on the medical aid, such as the taxpayer’s partner or children the taxpayer will receive more tax credits. For the first dependent the taxpayer will receive an extra R303.00, for any additional dependents the taxpayer receives an additional R204.00 for each dependent.

Section 6A deduction:

Let us have a look at John’s family.

Thus if it is a family of John, John’s Wife and three children where John is the main member of the medical aid, the total monthly tax credit will be:

John (main member) R303.00
John’s Wife (first dependant) R303.00
Child One (additional dependent) R204.00
Child Two (additional dependent) R204.00
Child Three (additional dependent) R204.00
Total tax credit per month R1 218.00
Total tax credit for the year R14 616.00

However, this is not the only possible tax credit.

There is also a tax credit for additional medical expenses. Now, if you want to sound smart you can tell your friends about the Section 6B additional medical expenses tax credit:

This one is a bit trickier. You will apply the following formula:

Your total contributions to a medical aid for the relevant tax year

Less:

4 x [the tax credit that you received under section 6A (the one we looked at above)]

Plus:

All the qualifying medical expenses that were not paid by the medical aid in the relevant tax year (out of pocket expenses).

Less:

7.5% of your taxable income (with some other minor technicalities which I will not mention here).

Equals:

The excess amount

Multiplied by 25%, equals:

The section 6B medical aid tax credit

Usually, a good indicator as to whether you will qualify for the additional credit is the rule of thumb to take your annual salary x 7.5% and determine whether you made additional medical expenditure above that amount.

Let us continue with the example of the family of John. We will work with the following assumptions:

  • John paid R5 000 to a medical aid on a monthly basis, R60 000 for the full tax year.
  • John paid R35 000 of medical expenses out of his pocket during the relevant tax year.
  • John earned a salary of R300 000 during the relevant tax year, which was his only taxable income.

Section 6B deduction:

R60 000 (total medical aid contributions)

Less:

4 x R14 616.00 (section 6A tax credit)

= R1 536

Plus:

R35 000 (medical expenses John covered from his pocket)

= R36 536

Less:

R22 500 (R300 000 x 7.5%) (7.5% of John’s taxable income)

= R14 036 (excess amount)

Multiplied by 25%, equals:

R3 509 (section 6B medical aid tax credit)

Thus John’s total medical aid tax credit for the year will be:

R14 616 (Section 6A) + R3 509 (Section 6B)

= R18 125.00

It is important to note that you can only deduct this tax credit against tax payable. In other words, if you have no tax payable (before this deduction) you will not get the R18 125 as a refund. Also if you have R10 000 tax payable (before this deduction), you will not get R8 125.00 as a refund.

2019 Tax year (01/03/2018 - 28/02/2019)

Let us examine how the Section 6A medical scheme fees tax credit for the 2019 tax year (2018 above) is determined.

Assuming the taxpayer is below the age of 65 and there is no member on the taxpayer’s medical aid with a permanent disability (in the case of the taxpayer being older than 65 and or disability involved the amounts and rates will differ):

For each month of the tax year that the taxpayer (main member) have belonged to a medical aid you get a tax credit of R310.00. If a taxpayer has any dependents on the medical aid, such as the taxpayer’s partner or children the taxpayer will receive more tax credits. For the first dependent the taxpayer will receive an extra R310.00, for any additional dependents the taxpayer receives an additional R209.00 for each dependent.

Section 6A deduction:

Let us have a look at John’s family.

Thus if it is a family of John, John’s Wife and three children where John is the main member of the medical aid, the total monthly tax credit will be:

John (main member) R310.00
John’s Wife (first dependant) R310.00
Child One (additional dependent) R209.00
Child Two (additional dependent) R209.00
Child Three (additional dependent) R209.00
Total tax credit per month R1 247.00
Total tax credit for the year R14 964

However, this is not the only possible tax credit.

There is also a tax credit for additional medical expenses. Now, if you want to sound smart you can tell your friends about the Section 6B additional medical expenses tax credit:

This one is a bit trickier. You will apply the following formula:

Your total contributions to a medical aid for the relevant tax year

Less:

4 x [the tax credit that you received under section 6A (the one we looked at above)]

Plus:

All the qualifying medical expenses that were not paid by the medical aid in the relevant tax year (out of pocket expenses).

Less:

7.5% of your taxable income (with some other minor technicalities which I will not mention here).

Equals:

The excess amount

Multiplied by 25%, equals:

The section 6B medical aid tax credit

Usually, a good indicator as to whether you will qualify for the additional credit is the rule of thumb to take your annual salary x 7.5% and determine whether you made additional medical expenditure above that amount.

Let us continue with the example of the family of John. We will work with the following assumptions:

  • John paid R5 000 to a medical aid on a monthly basis, R60 000 for the full tax year.
  • John paid R35 000 of medical expenses out of his pocket during the relevant tax year.
  • John earned a salary of R300 000 during the relevant tax year, which was his only taxable income.

Section 6B deduction:

R60 000 (total medical aid contributions)

Less:

4 x R14 964.00 (section 6A tax credit)

= R144

Plus:

R35 000 (medical expenses John covered from his pocket)

= R35 144

Less:

R22 500 (R300 000 x 7.5%) (7.5% of John’s taxable income)

= R12 644 (excess amount)

Multiplied by 25%, equals:

R3 161 (section 6B medical aid tax credit)

Thus John’s total medical aid tax credit for the year will be:

R14 964 (Section 6A) + R3 161 (Section 6B)

= R18 125.00

It is important to note that you can only deduct this tax credit against tax payable. In other words, if you have no tax payable (before this deduction) you will not get the R18 125 as a refund. Also if you have R10 000 tax payable (before this deduction), you will not get R8 125.00 as a refund.

2020 Tax year (01/03/2019 - 28/02/2020)

Let us examine how the Section 6A medical scheme fees tax credit for the 2020 tax year (2019 above) is determined.

Assuming the taxpayer is below the age of 65 and there is no member on the taxpayer’s medical aid with a permanent disability (in the case of the taxpayer being older than 65 and or disability involved the amounts and rates will differ):

For each month of the tax year that the taxpayer (main member) have belonged to a medical aid you get a tax credit of R310.00. If a taxpayer has any dependents on the medical aid, such as the taxpayer’s partner or children the taxpayer will receive more tax credits. For the first dependent the taxpayer will receive an extra R310.00, for any additional dependents the taxpayer receives an additional R209.00 for each dependent.

Section 6A deduction:

Let us have a look at John’s family.

Thus if it is a family of John, John’s Wife and three children where John is the main member of the medical aid, the total monthly tax credit will be:

John (main member) R310.00
John’s Wife (first dependant) R310.00
Child One (additional dependent) R209.00
Child Two (additional dependent) R209.00
Child Three (additional dependent) R209.00
Total tax credit per month R1 247.00
Total tax credit for the year R14 964

However, this is not the only possible tax credit.

There is also a tax credit for additional medical expenses. Now, if you want to sound smart you can tell your friends about the Section 6B additional medical expenses tax credit:

This one is a bit trickier. You will apply the following formula:

Your total contributions to a medical aid for the relevant tax year

Less:

4 x [the tax credit that you received under section 6A (the one we looked at above)]

Plus:

All the qualifying medical expenses that were not paid by the medical aid in the relevant tax year (out of pocket expenses).

Less:

7.5% of your taxable income (with some other minor technicalities which I will not mention here).

Equals:

The excess amount

Multiplied by 25%, equals:

The section 6B medical aid tax credit

Usually, a good indicator as to whether you will qualify for the additional credit is the rule of thumb to take your annual salary x 7.5% and determine whether you made additional medical expenditure above that amount.

Let us continue with the example of the family of John. We will work with the following assumptions:

  • John paid R5 000 to a medical aid on a monthly basis, R60 000 for the full tax year.
  • John paid R35 000 of medical expenses out of his pocket during the relevant tax year.
  • John earned a salary of R300 000 during the relevant tax year, which was his only taxable income.

Section 6B deduction:

R60 000 (total medical aid contributions)

Less:

4 x R14 964.00 (section 6A tax credit)

= R144

Plus:

R35 000 (medical expenses John covered from his pocket)

= R35 144

Less:

R22 500 (R300 000 x 7.5%) (7.5% of John’s taxable income)

= R12 644 (excess amount)

Multiplied by 25%, equals:

R3 161 (section 6B medical aid tax credit)

Thus John’s total medical aid tax credit for the year will be:

R14 964 (Section 6A) + R3 161 (Section 6B)

= R18 125.00

It is important to note that you can only deduct this tax credit against tax payable. In other words, if you have no tax payable (before this deduction) you will not get the R18 125 as a refund. Also if you have R10 000 tax payable (before this deduction), you will not get R8 125.00 as a refund.

Lastly, you can get all the relevant medical aid contributions, the number of members, etc. on your tax certificate that your medical aid provides to you on an annual basis. You have to keep this certificate for if SARS asks you to provide it as evidence for your deduction.

Author: Chris Herbst

Get our iOS app to help you with monthly and annual payroll tax calculations (including medical aid section 6A): https://itunes.apple.com/za/app/taxtree/id1263890353?mt=8

Would you like us to complete your tax return: Contact:https://www.chconsulting.co.za/contact

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Comments (167)

This comment was minimized by the moderator on the site

I'm not an accountant, but the method of calculating the 6B credit described here does not agree with the methods I see on the SARS, MoneyWeb and SelfMed websites. They take the 25% only after the 4x6A credit has been subtracted from medical aid...

I'm not an accountant, but the method of calculating the 6B credit described here does not agree with the methods I see on the SARS, MoneyWeb and SelfMed websites. They take the 25% only after the 4x6A credit has been subtracted from medical aid contributions. They also use only 25% of the figure for out-of-pocket expenses minus 7.5% of income. This methodology counts all of out-of-pocket expenses minus 7.5% of income as a credit. Is there a good reason for the discrepancy?

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This comment was minimized by the moderator on the site

Hi Don, thank you for pointing this out. I have consulted the income tax act and your are indeed correct, my apologies for the error. The 25% should be multiplied at the end of the calculation. I have updated the post to correct the error. You...

Hi Don, thank you for pointing this out. I have consulted the income tax act and your are indeed correct, my apologies for the error. The 25% should be multiplied at the end of the calculation. I have updated the post to correct the error. You can see the relevant legislation from the income tax act at: http://www.acts.co.za/income-tax-act-1962/index.html?6_normal_tax_rebates.php

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This comment was minimized by the moderator on the site

To be mathematically clear you take: [(total medical aid contributions - 4 x section 6A credit) + additional qualifying medical expenses - 7.5% of taxable income] x 25%

This comment was minimized by the moderator on the site

If over 75 and contributions are made by your ex employee how does the calculation differ? Kind regards

This comment was minimized by the moderator on the site

Hi Chris,

I was wondering what would happen in the following situation: tax payer pays for wifes Medical every month and also pays for additional medical expenses as the wife is not working. The wife is the main member of her own her own medical...

Hi Chris,

I was wondering what would happen in the following situation: tax payer pays for wifes Medical every month and also pays for additional medical expenses as the wife is not working. The wife is the main member of her own her own medical aid and is not on the husbands medical as she is a chronic diabetic and her husbands medical aid would not suffice. Can this large amount spent on his wifes medical aid and her medical condition be rebated in any way?

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This comment was minimized by the moderator on the site

Hi Genna-Leigh,

Thank you for your question. Since it is a spouse paying for the additional medical expenses he will be able to include these expenses under the section 6B calculation of his personal tax return. However please note that the...

Hi Genna-Leigh,

Thank you for your question. Since it is a spouse paying for the additional medical expenses he will be able to include these expenses under the section 6B calculation of his personal tax return. However please note that the section 6B calculation includes a step where the additional expenses will be reduced by 7.5% of the spouse's annual taxable income - which may nullify the additional deduction.

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Hi

What about section 6A. Is it only to the main member?

I am currently under a work medical aid and not allowed to add my parents to it. As such i have made my dad the main member to cover him and my mom. I pay for the premiums a d additional...

Hi

What about section 6A. Is it only to the main member?

I am currently under a work medical aid and not allowed to add my parents to it. As such i have made my dad the main member to cover him and my mom. I pay for the premiums a d additional expenses.

Read More
This comment was minimized by the moderator on the site

Hi Inga,
You will be able to claim for these deductions. However your parents will be deemed as your dependents. Thus if you are the only main member on your own medical aid, you will be able to claim one of your parents as first dependent (the...

Hi Inga,
You will be able to claim for these deductions. However your parents will be deemed as your dependents. Thus if you are the only main member on your own medical aid, you will be able to claim one of your parents as first dependent (the higher rate) and the other parent as an additional dependent (the lower rate). If you already have a first dependent on your own medical aid, you will have to handle both your parents as additional dependents (at lower rate). Also SARS may ask for verification in which case you will need to submit the medical aid certificate of your parents as well as proof that you have made the payments.

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This comment was minimized by the moderator on the site

Hi,

My husband is the main member on our medical aid and I am the dependant. But I pay all the extra medical expenses as I am the main bread winner. And we are doing fertility treatment. The statements for the fertility treatment is on my...

Hi,

My husband is the main member on our medical aid and I am the dependant. But I pay all the extra medical expenses as I am the main bread winner. And we are doing fertility treatment. The statements for the fertility treatment is on my name. Under whose tax return do I load it? Mine or my husbands. Any help will be greatly appreciated.
Thanks

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This comment was minimized by the moderator on the site

Hi Michele,

Thank you for your comment. Assuming that your expense is a qualifying expense (Services rendered and medicines supplied by a registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist,...

Hi Michele,

Thank you for your comment. Assuming that your expense is a qualifying expense (Services rendered and medicines supplied by a registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopaedist), it will make sense to claim it on your husband's tax return (since his annual taxable income is lower and thus your additional tax credit will be higher on his side). To the best of my knowledge you are free to claim it on your own or your husband's tax return since you are in a spousal relationship. If SARS does query this you can explain that your are in a spousal relationship.

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This comment was minimized by the moderator on the site

Hi there, please can u help me answer a question that's been hanging over my head for ages. My husband is the main member on our medical aid, we paid in a ridiculous amount of money last year for medical out of our own pockets. My husband is a...

Hi there, please can u help me answer a question that's been hanging over my head for ages. My husband is the main member on our medical aid, we paid in a ridiculous amount of money last year for medical out of our own pockets. My husband is a apprentice so he's below the tax threshold, when we submitted his tax on efiling it said we had a 45k tax credit.. what does this mean, will this ever be refunded back to him? Thank u

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This comment was minimized by the moderator on the site

Hi Jolene,
Thank you for your comment. I will not be able to answer your question without knowing the details of your husband's situation for that particular tax year. It may be that a refund is due to him, but being held back for some reason. I...

Hi Jolene,
Thank you for your comment. I will not be able to answer your question without knowing the details of your husband's situation for that particular tax year. It may be that a refund is due to him, but being held back for some reason. I would recommend you phone SARS to clarify the situation.

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This comment was minimized by the moderator on the site

I am currently doing my tax return. Despite a R25k out of pocket medical expense, my rebate is significantly lower than other years. Does it make a difference if my employer pays my medical aid premium?

This comment was minimized by the moderator on the site

Hi Gillian,
Thank you for your comment. It depends on a number of factors. Make sure that your IRP5 shows the correct code if your employer paid the medical aid premium. The section 6b credit for the out of pocket expense will only make a...

Hi Gillian,
Thank you for your comment. It depends on a number of factors. Make sure that your IRP5 shows the correct code if your employer paid the medical aid premium. The section 6b credit for the out of pocket expense will only make a difference if your annual taxable income is below a certain amount - it may be that your annual income has increased since the previous year. A number of other factors can also play a role.

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This comment was minimized by the moderator on the site

Hi, thanks for good article. So My wife was pregnant and made many out of pocket payments not reflecting on Medical Aid IRP5. Which section are these totals completed in ?

This comment was minimized by the moderator on the site

Hi Ari,
It is a pleasure. Firstly you have to determine whether the specific expense was a qualifying expense see below as from SARS Guide:

Examples of qualifying medical expenses:

 For services rendered and medicines supplied by a registered...

Hi Ari,
It is a pleasure. Firstly you have to determine whether the specific expense was a qualifying expense see below as from SARS Guide:

Examples of qualifying medical expenses:

 For services rendered and medicines supplied by a registered medical
practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist,
physiotherapist, chiropractor or orthopaedist for professional services rendered
or medicines supplied to the person or any dependant of the person;
 To a nursing home or hospital or any duly registered or enrolled nurse, midwife
or nursing assistant (or to any nursing agency in respect of the services of such
a nurse, midwife or nursing assistant) in respect of the illness or confinement of
the person or any dependant of the person
 For medicines prescribed by a registered medical practitioner and acquired from
a pharmacist
 Medical expenses incurred and paid outside South Africa.

Secondly you need to have proof that you incurred the expenses in the form of invoices from the relevant medical institution or pharmacy.

Provided your expenses meet these requirements, you can enter it under the following section:

‘State any qualifying medical expenses paid by you not claimed from any
medical scheme and not reflected on any medical scheme certificate (other than
physical impairment or disability expenses)’

with code 4034.

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This comment was minimized by the moderator on the site

Hi.
My parent is a dependent (and is unemployed). She is the main member of a medical aid of which I am the payer? Can i claim the tax credit ?

This comment was minimized by the moderator on the site

Hi Michelle,
Thank you for your comment. You will be able to claim the credit as your mother can be seen as your dependant and you have made the actual payment for the contribution. However please note that you will only be able to claim the...

Hi Michelle,
Thank you for your comment. You will be able to claim the credit as your mother can be seen as your dependant and you have made the actual payment for the contribution. However please note that you will only be able to claim the R181 (for dependant) credit per month. If SARS queries your deduction you can submit your mother's medical aid certificate along with proof that you actually paid the contribution. Section 6 of the income tax act provides more details on this matter.

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This comment was minimized by the moderator on the site

Hi Chantal,
It is a pleasure. Yes please provide feedback once you have the result.

This comment was minimized by the moderator on the site

Hi Chris,

i just got feedback. Looks like they aren't paying me for my payments on my Mom's medical aid. My initial assessment came at -R29000. They took back around R22000, thus paying me approximately R7000. I did not get any response from...

Hi Chris,

i just got feedback. Looks like they aren't paying me for my payments on my Mom's medical aid. My initial assessment came at -R29000. They took back around R22000, thus paying me approximately R7000. I did not get any response from them. Just the calculations.

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This comment was minimized by the moderator on the site

Hi Chantal,
The max deduction you can get for your mothers medical aid is R181.00 x 12 = R2 172.00, since she is seen as a dependant. I am off course not sure regarding what else is involved with your tax return.

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