Medical expenses can be a significant part of a household’s budget, particularly for families with chronic illnesses or disabilities. The South African Income Tax Act provides relief in the form of medical scheme fees tax credits and additional tax deductions for qualifying out-of-pocket expenses. This article unpacks how these medical deductions work, what qualifies as an expense and what documentation taxpayers need to retain to claim them effectively.
1. Overview of Medical Tax Relief in South Africa
Medical tax relief is provided through a combination of:
- Medical Scheme Fees Tax Credit (MTC)
- Additional Medical Expenses Tax Credit (AMTC)
Unlike traditional deductions, these are rebates (referred to as “tax credits”), which reduce the tax payable directly rather than reducing taxable income. However, there are limits and formulas and only qualifying medical expenses are considered.
2. Medical Scheme Fees Tax Credit (MTC)
This credit applies to contributions made to a registered South African medical scheme (or foreign equivalent). For the 2024/2025 tax year, the MTC is:
- R364 per month for the main member
- R364 per month for the first dependent
- R246 per month for each additional dependent
So, for example, a taxpayer with a spouse and two children on their medical aid would receive a total tax credit of:
R364 + R364 + (2 x R246) = R1,220 per month
This is a non-refundable rebate — it reduces the taxpayer’s tax liability, but cannot create a refund if no tax is otherwise payable.
3. Additional Medical Expenses Tax Credit (AMTC)
If you incur qualifying medical expenses in excess of what your medical scheme covers — or if you contribute to a medical scheme on behalf of someone with a disability — you may qualify for an additional tax credit. There are three categories of taxpayers with different formulas:
- Taxpayers without a disability or under 65
These taxpayers can claim 25% of the amount by which:
Out-of-pocket qualifying medical expenses + (medical scheme contributions exceeding 4x the MTC) exceed 7.5% of taxable income. So if a taxpayers taxable income is R300 000 then medical expenses above R 22 500 qualify as a deduction.
This threshold is relatively high, meaning only significant medical expenses generate relief.
- Taxpayers with a disability or a disabled dependent (spouse or child)
Here, the formula is more generous. You can claim 33.3% of:
- Qualifying medical expenses, plus
- Medical scheme contributions in excess of 3x the total MTC
The 7.5% threshold does not apply in these cases — a key advantage.
- Taxpayers aged 65 or older
Also entitled to claim 33.3% of:
- Qualifying expenses plus
- Medical scheme contributions in excess of 3x the MTC
Again, no 7.5% threshold applies.
4. What Qualifies as a Medical Expense?
SARS recognises the following as qualifying medical expenses:
A. Medical Scheme Contributions
- Must be made to a registered South African medical scheme or an approved foreign scheme.
- Contributions made on behalf of dependants (including adult children or parents) may be included if supported.
B. Out-of-pocket expenses not reimbursed by medical aid, including:
- GP and specialist consultation fees
- Hospital expenses
- Surgery and medical procedures
- Prescribed medication
- Blood tests and diagnostic procedures
- Medical appliances (e.g., wheelchairs, hearing aids)
- Physiotherapy, psychology, occupational therapy
5. Disability Deductions – Additional Relief
Taxpayers may claim additional relief if the medical expenses relate to a disability, defined as:
- A moderate to severe limitation of a person’s ability to function or perform daily activities, resulting from a physical, sensory, communication, intellectual, or mental impairment, which has lasted or is expected to last more than a year.
- To claim these, you must submit a completed ITR-DD form (Confirmation of Diagnosis of Disability) signed by a registered medical practitioner. This form must be updated every five years, or sooner if circumstances change.
If the ITR-DD is in place, qualifying disability expenses go beyond medical specific costs. Some examples include:
- A portion of the special education cost (where curriculum is adapted for the child’s disability)
- Mobility aids (wheelchairs, special transport)
- Home or car modifications (e.g., ramps, widened doorways)
- Guide dog costs
- Specialised computer equipment or software for the disabled individual
These are not subject to the 7.5% threshold and attract the more generous 33.3% credit.
6. Records Taxpayers Must Keep
To substantiate claims, taxpayers should keep:
- Medical aid tax certificates
- Invoices and receipts for out-of-pocket expenses
- Proof of payment (EFT slips, bank statements, etc.)
- A copy of the ITR-DD form (if claiming disability expenses)
- Details of the nature and purpose of each expense
SARS may request these during an audit, and failure to provide them may lead to disallowance.
7. Common Pitfalls to Avoid
- The payer is the claimer: Whoever pays the medical costs is the taxpayer who can claim the medical costs. That applies to medical aid contributions as well as individual medical costs. Consolidate family medical spending with one person who would get the most out of the claiming process as the 7.50% threshold applies per person so splitting the medical costs usually leads to lower tax outcomes.
- Double-dipping: Don’t claim expenses that were already reimbursed by your medical aid.
- Unsubstantiated expenses: Claims without receipts or explanations are likely to be rejected.
- Non-qualifying schemes: Ensure your medical aid is a registered scheme; informal arrangements or hospital cash-back policies don’t qualify.
- Disability claims without ITR-DD: Relief will be denied if the form is missing or not properly completed.
Medical deductions can offer meaningful relief — especially for families with high medical costs or special needs. However, the rules are technical and the formulas can be complex. Keeping proper records, ensuring medical practitioners complete the necessary forms and understanding how SARS interprets “qualifying expenses” are essential to optimising your tax outcome.
If you’re uncertain whether you qualify, or want to ensure you’re claiming correctly, chat with us and we can guide you through the process and help you avoid pitfalls.
