It's definitely worth knowing the rules regarding tax and medical expenses, so that you don't lose out on what you are entitled to claim.
Generally, medical costs are deductible against your taxable income if they are more than R1 000 or five percent of your taxable income, whichever is the greater. If you are over 65 years old, you are entitled to deduct all your medical costs.
If you are under 65 and you or one of your dependants are handicapped then all related medical expenses over R500 are deductible. "Handicapped" is defined and you need to ensure that the nature of the handicap for which you are claiming qualifies.
Medical expenses include:
* Contributions to a registered medical aid scheme;
* Amounts paid (and not refunded by a medical aid scheme) to a registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthoptist for professional services or medicines supplied;
* Amounts paid to a nursing home or hospital or registered nurse due to illness or confinement;
* Amounts paid to a pharmacist for prescription medicines;
* Amounts necessarily incurred because you or your dependant have a physical disability.
Generally, a dependant is:
* Under 18, or
* Over the age of 21, but dependent on you and not liable as a taxpayer in his or her own right unless such tax is purely SITE tax, and, if over 26, is also a full time student; or
* Incapacitated by physical or mental infirmity, not liable for tax other than SITE tax and wholly or partially dependent on you.
If you don't submit a tax return because the only income you receive is a wage or salary on which SITE has been paid (ie the income does not exceed R60 000 a year), the medical expenses you have paid will not have been taken into account. In order to obtain the benefit of a deduction you would need to apply to the SARS and supply details of your expenses.
If you are an employee and belong to a medical aid, the medical aid contributions may be a percentage paid by you out of after-tax income, and a percentage paid by your employer or, if the fund rules allow it, your employer may make the full contribution.
The tax rules relating to medical aid contributions changed from March 1 this year so that, if your employer contributes more than two thirds of the total contribution, the excess will be taxed as a fringe benefit in your hands. The new rule does not affect the amount you can deduct for medical expenses.
So if your employer pays the full contribution of, for example, R600 a month, you will be taxed on a third of it, ie R200. If you pay 50 percent of the contribution out of your after-tax income, ie R300, and your employer pays the other 50 percent, your employer is not contributing more than two-thirds of the total contribution, so you will not be taxed further.