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How the medical tax credits add up

How the medical tax credits add up

The medical tax credit you enjoy will be calculated for your employer before it deducts Pay As You Earn (PAYE) tax, or by the South African Revenue Service (SARS) when you submit your tax return.  Read more: What is a medical tax credit?

The calculation is based on the rand amounts provided for each member and dependant each tax year. The amounts are announced in the Budget each year and become effective with other tax rates when the Income Tax Act is amended after the Budget. You can view the latest rates here.

However, if you want to know how the credit is calculated, here is an example of the calculation.

AN EXAMPLE OF HOW THE TAX CREDITS FOR MEDICAL SCHEME CONTRIBUTIONS APPLY

A taxpayer registers a family of four on a medical scheme for the full tax year.

The taxpayer adds a baby in the last month of the tax year.

In the 2023 tax year, using the amounts in the tax tables, the taxpayer will:

  • Be entitled to a monthly rebate for the first 11 months of:

R347 + R347 + R243 + R243 = R1 180

  • Be entitled to a rebate in the last month of:

R347 + R347 + R243 + R243 + R243 = R1 423

  • In total, for the full tax year, be entitled to a rebate of:

(R1 180 x 11) + 1 423 = R14 403.

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