Medical aid claim on IRP5

[dvvdee]

The husband is the main member of a medical aid (Medshield) and his wife (also the main member) is on a different medical aid (Discovery) with their two children, but the husband pays for both medical aids. Can the husband then claim both medical aids on his tax calc, even though its two different medical aids? My second question is how will the medical tax credits work as he is the main member of his own and his wife and first child will be the first two members of her medical? Will there be three of the R332 medical tax credit per month and R224 for the youngest child only or only him and his wife R332 and the other two children the R224 amount? Thank you kindly.

[Christophe]

Hi dvvdee,

Well, the Section 6A medical tax credit of R332 will apply to the taxpayer and the first dependent only, for every other dependent, it will be the R224. In other words, for the third dependent onwards, only the 224 will apply. The credits are calculated per month the contributions was paid.

In this case his wife and 2 kids are still dependents of his and they actually do belong to a registered medical aid so there is they can still be used in determining the medical tax credit in terms of s6A


How old is the taxpayer - if they are under 65 then you can also only claim a further 25% on the excess of medical aid contributions less 4 times the s6a tax credit plus the qualifying additional expenses which exceeds 7.5% of your taxable income

So in reality these medical costs doesn't give you a huge tax benefit, although the s6b additional tax credit does look a bit better if you are over 65.

As the husband is the one paying the medical aid he ought to be the one using the tax credits.

Also do remember that you can deduct up to 27.5% of your taxable income towards your pension and provident fund contributions and then a further 10% can be deducted for donations where you receive a s18a certificate when you donate to a SARS recognized public benefit organization.

Another thing to keep in mind is that if you earn a high salary then you pay also high taxes, while if you incorporate a business the business will only pay a maximum of 28% tax, but can be lower if it is a SBC. Trusts also is a useful way of doing tax planning, especially discretionary trusts, but the caveat is of course that any income that remains taxable in the trust will be taxed at the maximum rate for individuals and if you have a trust or more than one company, then you also don't qualify for SBC even if you meet the other requirements.

You can always look at SARS Legal Counsel guide on medical tax credits if you want to learn more about that specific thing.

But really, I find people try and make too much of their medical expenses and are often dissappointed by how much they can actually pay.

My advice for the additional medical tax credit is to always try consolidate your medical expenses to maybe one or two sources, so for example, always try to run everything through the medical aid, whether they cover it or not - you can then just refer to the medical aid certificate for the claims not recovered from the medical aid - this is just simpler and easier than maintaining a schedule with all the invoices with medical practitioner numbers and prescriptions numbers and amounts on it, which can be a real schlep

[Christophe]

**disaapointed by how much they can actually CLAIM

As in you really have to spend quite a bit to claim a few pittance on the additional medical tax credit.....