This is article three discussing the updated Medical Tax Credits Guide, Issue 18, of June 2026. Please read the previous articles before proceeding with this article.
Employees’ tax implications
Medical scheme fees tax credit
An employer that effects payment of the medical scheme fees is obliged to take into account the MTC when calculating the employees’ tax to be deducted or withheld from the employees’ remuneration. This is usually carried out using the various payroll systems. The MTC may be taken into account at the option of the employer where the employer does not effect payment of the medical scheme fees, and if proof of payment of those fees has been furnished to the employer. Taxpayers who have not had their MTC taken into account may claim the applicable rebate by submitting an annual ITR12 income tax return to take advantage of the credit.
A South African employer that makes contributions to a foreign medical fund in respect of an employee has the obligation to determine whether the legislation that governs such foreign fund is similar to the provisions of the MS Act and whether such contributions will therefore qualify for an MTC.
Additional medical tax credit (AMTC)
A taxpayer who is 65 years of age or older may qualify to have a portion of the AMTC taken into account when calculating the employees’ tax to be deducted from his or her remuneration.
The taxpayer must be a member of a registered medical scheme and, if the employer:
(i) pays the medical scheme contributions directly, the employer is required to take the qualifying portion of the AMTC into account; or
(ii) does not pay the medical scheme contributions directly, the employer may take the qualifying portion of the AMTC into account, if the taxpayer has provided proof of payment of the contributions.
The portion of the AMTC that qualifies to be taken into account in calculating the employees’ tax to be deducted, is the portion that relates to the “excess contributions”, calculated as follows:
33,3% of the fees paid to a medical scheme or qualifying foreign fund as exceeds three times the amount of the MTC to which that person is entitled.
Out-of-pocket expenses may not be taken into account for employees’ tax purposes. Taxpayers who have not had their AMTC taken into account for employees’ tax purposes may submit a tax return to SARS to take advantage of the AMTC.
How to claim the medical scheme fees tax credit and additional medical expenses tax credit
Persons registered for income tax
Included in the documentation that must be retained for audit purposes when an MTC or AMTC is claimed for a year of assessment is the following:
• Proof of contributions paid to a registered medical scheme or to any other funds registered under similar provisions in the laws of any other country. Contributions paid to a registered medical scheme will be reflected on the medical scheme certificate.
• A statement from the medical scheme indicating the total amount of claims submitted to the fund that were not refunded to the taxpayer or paid by the scheme to the service provider. The medical statements, which are generally released by each medical scheme in February or March each year, usually reflect the total amount for the year of assessment. Taxpayers could be asked to prove that they have paid the amounts disclosed on the medical scheme certificates.
• A completed list of amounts not submitted to (or recoverable from) the taxpayer’s medical scheme, medical insurer or any other person, together with proof of such amounts incurred and paid.
• In cases where receipts have been made out in the name of a dependant, or contributions or fees in respect of a dependant have been made to a different medical scheme to the one to which the taxpayer belongs, SARS will accept a sworn affidavit in which the taxpayer indicates that the contributions, fees or qualifying expenses claimed for the dependant, have actually been paid by the taxpayer (either directly or indirectly).
• A letter from the taxpayer’s medical scheme, stating that the benefits allocated to certain medical procedures are exhausted, when applicable.
• A duly completed and signed Confirmation of Disability (ITR-DD) form, if applicable.
The above-mentioned documentation, as well as receipts, must not be submitted with the annual income tax return, but must be stored and made available on SARS’s request, in the event that a taxpayer is required to substantiate the medical claims. A taxpayer is required to keep records such as receipts, paid cheques, bank statements, deposit slips and invoices for five years from the date of submission of the return. In cases where objections and appeals have been lodged against assessments, the taxpayer must keep all records and data relating to the assessments under objection or appeal until such time that the objection or appeal has been finalised, even if the timeframe for finalisation exceeds five years.
Persons not registered for income tax
Taxpayers who are not required to submit tax returns are generally either employees, or are taxpayers whose income is below the tax threshold. These taxpayers may have an MTC or AMTC that was not taken into account during the year of assessment. The mere submission of a tax return will have no effect on the taxpayer’s tax liability if the employer has already taken the MTC or AMTC into account. The MTC or AMTC will also not create a refund if the taxpayer has no liability for normal tax.
Taxpayers must request an income tax return at the local SARS Service, via the national SARS Service Centre or online through the SARS eFiling website (www.sarsefiling.co.za) if there is an MTC or AMTC that has not been taken into account, and if the taxpayers wish to apply for a refund. Should the MTC or AMTC result in a reduction of the tax paid, the taxpayer will become entitled to a refund.
How to object to the disallowance of a medical scheme fees tax credit or additional medical expenses tax credit
A taxpayer who claimed an MTC or AMTC and who is aggrieved with the assessment issued may object to it. The objection must be in the prescribed form “Notice of Objection” (NOO) which can be obtained via eFiling or at a SARS Service Centre. The NOO, which states the grounds on which the objection is lodged, must reach the relevant SARS Service Centre where the taxpayer is on register for income tax within 80 business days after the date of the assessment or SARS decision.
The relevant documentation as discussed above must be submitted together with the objection. Further information regarding the objection and appeal procedure is available on the SARS website and is set out in the Dispute Resolution Guide: Guide on the Rules Promulgated in Terms of Section 103 of the Tax Administration Act, 2011.
Other information
Relief of customs and ad valorem excise duty on a motor vehicle adapted for a person with disability
The full customs or ad valorem excise duty on motor cars and other motor vehicles may, by specific permit, be claimed as a rebate under the conditions prescribed by the International Trade Administration Commission (imported vehicles) or SARS (locally manufactured vehicles), after consultation with the National Council for Persons with Physical Disabilities in South Africa. These vehicles, including station wagons (excluding racing cars) must be principally designed for the transport of persons and adapted or be adapted so that they can be driven solely by a person with a physical disability.
The following conditions apply:
In respect of a motor car or other motor vehicle to be driven solely by persons with a physical disability:
(a) The adaptation of the motor vehicle must be of such a nature that the driver (with a physical disability) of the motor vehicle has easy access to all controls necessary to drive such a vehicle.
(b) A permit may not be issued within three years of the issue of a previous permit to such person with a disability.
(c) Permits may, however, be issued within a shorter period provided that proof is submitted that the motor vehicle previously entered under rebate of duty was stolen or written off by the licensing authorities.
(d) If such vehicle is offered, advertised, lent, hired, leased, pledged, given away, exchanged, sold or otherwise disposed of within three years from the date of entry in terms of this item, such foregoing acts shall render the vehicle liable to the payment of duty on a pro-rata basis.
In respect of a motor car or other motor vehicle for the transport of persons with a physical disability:
(i) Such permit may only be issued to a person or organization who is registered to care for and to transport persons with a physical disability.
(ii) If such a motor vehicle is offered, advertised, lent, hired, leased, pledged, given away, exchanged, sold or otherwise disposed of within three years from the date of entry under this rebate item, such foregoing acts shall render such vehicle liable to the payment of duty on a pro rata basis.
The full rebate of either customs or ad valorem excise duty of such vehicles is regulated as follows:
(aa) Imported vehicles: Part 2 of Schedule 4 to the Customs and Excise Act 91 of 1964, rebate item 460.17, tariff heading 87.00 rebate code 04.02 (transport) and tariff heading 87.03 rebate code 02.04 (to be driven).
(bb) Locally manufactured vehicles: Part 2 of Schedule 6 to the Customs and Excise Act, rebate item 630.20 (transport) and 630.22 (to be driven).