| What is it? A Medical Scheme Fees Tax Credit (also known as an “MTC”) is a rebate which reduces the normal tax a person pays. This rebate is non-refundable and any portion that is not allowed in the current year can’t be carried over to the next year of assessment. It applies for years of assessment starting on or after 1 March 2012 (from the 2013 year of assessment). Who is it for? The MTC effectively replaced part of the tax deduction that was specifically allowed for medical scheme contributions, and applies to fees paid by a taxpayer to a registered medical scheme (or similar registered scheme outside South Africa) for that taxpayer and his or her “dependants” (as defined in the Medical Schemes Act). This MTC seeks to bring about greater fairness and help achieve greater equality in the treatment of medical expenses across all income groups. The MTC is a fixed monthly amount which increases according to the number of dependants: |
How does it work? The MTC will effectively impact both the employer and the employee. This credit must be taken into account by the employer when calculating the amount of Employees’ Tax to be deducted from the employees’ remuneration. Individuals who have not had their MTC taken into account by an employer (for example, an individual who is retired and receives a pension; or an individual who is self-employed) can claim the MTC on assessment by submission of an annual income tax return.