It’s not all doom and gloom when it comes to the rising costs of medical expenses. You can expect some tax relief if you contribute to a medical aid and if you spend a certain amount on ‘out of pocket’ expenses. Read here for more information on medical tax credits and how they work.

Medical expenses and their tax impact are a complex issue for many. It’s no surprise that it’s a common theme on our Helpdesk. We’ve selected frequently asked questions to help you understand medical expenses when filing your taxes. 

1. I had medical expenses that qualify for a tax deduction and used TaxTim’s medical tax credits calculator. I filled out the form and hit calculate. The Medical scheme credits (section 6A) gave me an amount, but the result in the qualifying medical expenditure (section 6B) says R0.00. Is this correct?

You would need to spend a significant amount of money on additional medical expenses in order to qualify for a section 6B medical deduction. If you spend less than the threshold (7,5% of your taxable income), then you won't receive any medical credit for qualifying expenses. Please read our blog on Tax deductions for Out of Pocket expenses for more information.

2. Can I claim medical expenses for tax purposes if I am not the main member of the medical aid? For instance, I'm a dependent on my husband’s medical aid, but I spend a significant amount of money on prescription medication (or ‘out of pocket’) that’s not covered by medical aid each year?

In this type of scenario, there are a few things to consider. Firstly, were these expenses submitted to the medical aid? If yes, they would reflect on the medical aid tax certificate as expenses not covered by the medical aid. This amount would then automatically be added to the main member's medical section on their tax return and they would then need to claim these costs.

However, if your prescription medication was not submitted to the medical aid and therefore, not included on the medical tax certificate, you should be able to claim the expense on your own tax return. Please ensure that you keep each invoice in case SARS requests supporting documentation from you. If you paid for your medication with a card, then you must provide a bank statement as proof of the purchase.

3. Has there been any amendments to the disability claims for the 2020 tax year?

Yes – besides the ITR-DD having a change in layout, the form is now valid for a period of 10 years (instead of 5 years) for taxpayers with a permanent disability.

See a full List of Qualifying Physical Impairment or Disability Expenditure - effective 1 March 2020 published on SARS website for more information.

4. Can I claim the insurance of my hearing aid as a medical expense? I have an ITR-DD certificate to confirm my hearing disability.

Yes, you can claim it as part of your disability expenses. If documents are requested from SARS, you will need to submit the ITR-DD form, the proof of the insurance agreement and your proof of payment for at least 3 months.

5. What is the best way for a couple to structure their medical aid and medical costs from a tax perspective? For instance, if one spouse earns R50k per month and the other R25k per month:

a) Who should pay the medical aid premiums?
b) Who should pay the medical expenses?

a) The tax benefit received as the result of being a member of a medical aid is a flat monthly amount. Since it is a fixed tax credit, which is not dependent on earnings, it makes no difference who pays the premiums, as the tax benefit will be the same, regardless of the amount of income received.

b) In most cases, medical expenses are submitted to a medical aid. If the medical aid does not cover all of the expenses, the non-reimbursed portion (i.e. the amount that the taxpayer had to cover personally) will be reflected on the medical aid tax certificate. This amount is automatically included on the main member’s tax return and reflected in their medical section. The medical aid contributions will also be reflected on the main member’s tax return. It is advised that the one who pays the medical aid should also pay the medical expenses, as the two amounts on the medical certificate are related and will both be reflected in the main member’s tax return.

So instead, the question should be, who should the main member of the medical aid be? The tax benefit received as a result of paying medical expenses consists of two parts:

• The first part relates to the monthly medical aid premium, which is a fixed rate, and this will be the same for every taxpayer.
• The second part, the ‘additional medical tax credit’ is calculated by way of a complicated formula based on your ‘out-of-pocket’ medical expenses.  This part of the medical tax credit is often misunderstood. Many people don’t realise that you need to spend quite a significant amount on medical expenses. You would have to spend roughly more than 7,5% of your taxable income, that is not refunded by your medical aid, in order to receive a tax credit. Based on this formula, the person earning less has a greater chance of spending more than 7,5% of their taxable income on medical expenses. In this case, it might be more beneficial, from a tax perspective, for the taxpayer earning R25k per month to pay for all the medical expenses.

Check out our Medical aid tax credits calculator to help determine the total taxable credit amount for your medical expenses.

6. My husband and I went for IVF and my husband paid all the medical bills. Can I claim the expenses on my tax return, or must my husband claim them?

Your husband must claim them, because he paid for them. Whoever claims the expense, must be able to provide proof of payment in their name to SARS.

7. Why did I not receive a tax refund, even though I contributed to a Medical Aid through my employer?

Your employer is obligated to adjust your monthly employees tax deductions by the medical tax credit. and therefore, you may have already received your medical tax credit throughout the year, by means of a reduced employee’s tax on your salary.

8. I took out a loan from a family member who paid the hospital directly for my operation. I am now paying them back - can I claim for medical expenses?

Yes, you can still claim the medical expenses. However, you will need to provide all relevant proof of this arrangement to SARS. Make sure that you draw up a loan agreement between you and the family member, in which you explain the terms of the loan. You will need to submit this agreement to SARS, along with the proof that you have repaid the amount. If there is still an amount outstanding on the loan, you'll only be able to claim medical expenses for the amount that you've repaid until the end of that tax year.

9. I have made co-payments to two doctors for my husband’s child who was involved in a car accident, as the medical aid had no savings. Can I claim back the co-payments that I made to the doctors?

If the child is financially dependent on you, then you are able to claim these ‘out of pocket’ expenses. If the child is not financially dependent on you, you, unfortunately, won't be able to claim these expenses.