This updated SARS guide, Issue 18, provides general guidelines regarding the medical scheme fees tax credit and additional medical expenses tax credit for income tax purposes. This guide is not an “official publication” as defined in section 1 of the Tax Administration Act 28 of 2011 (TA Act) and accordingly does not create a practice generally prevailing under section 5 of that Act. It does not consider the technical and legal detail that is often associated with taxation and should, therefore, not be used as a legal reference.
It is also not a binding general ruling (BGR) under section 89 of the TA Act. Taxpayers requiring an advance tax ruling or a VAT ruling should visit the SARS website at www.sars.gov.za for details of the application procedure.
This guide takes into consideration the amendments up to and including the Taxation Laws Amendment Act 5 of 2026, the Tax Administration Laws Amendment Act 4 of 2026 and the Rates and Monetary Amounts and Amendment of Revenue Laws Act 3 of 2026, which were all promulgated on 1 April 2026. As the year of assessment of an individual ends on the last day of February, the amendments apply to the years of assessment commencing on or after 1 March 2025 (that is, the 2026 year of assessment).
The June 2026 guide contains the most up-to-date inner workings of the Income Tax Act with respect to medical tax matters.
This article is an update to the previous article published in September 2022 found here: https://fincor.co.za/income-tax-and-medical-tax-credits-for-the-individual/.
This updated article lists basic definitions and a summary of typical examples of contributions made to a registered medical scheme before discussing medical tax credits in article two.
Expenditure of a personal nature is generally not taken into account in determining a taxpayer’s income tax liability under South Africa’s tax system. One of the notable exceptions relates to medical expenditure. South Africa is aligned with the practice in many other countries of granting tax relief for medical expenditure.
There are a number of reasons that tax systems provide such relief. One of the reasons is that serious injury or illness can present taxpayers with disproportionately high medical bills in relation to income, which can be difficult to meet. The resulting hardship affects a number of economic areas for taxpayers, including the ability to settle obligations to the fiscus, such as a tax bill.
Historically, South Africa utilised a deduction system to facilitate tax relief for medical expenditure. Allowances, subject to certain limits, were permitted to be deducted from income for contributions to medical schemes, as well as for out-of-pocket medical expenditure.
In 2012, tax relief for medical expenditure began a phased-in conversion from a deduction system to a tax credit system. The reason for the change was to eliminate vertical inequity relating to medical contributions: those at higher marginal tax rates received a larger reduction of tax payable than those on lower marginal rates, in respect of the same amount of medical expenditure. The purpose of the change was to spread tax relief more equally across income groups, thus bringing about horizontal equity – those who pay equal values for medical expenditure receive absolute equal tax relief.
A tax credit system differs from a deduction system in that, instead of permitting a deduction of the medical allowance against a taxpayer’s income, the relief is granted as a reduction in tax payable. It therefore operates as a tax rebate.
The new dispensation consists of a two-tier credit system:
- A medical scheme fees tax credit (MTC) that applies in respect of qualifying contributions to a medical scheme.
- An additional medical expenses tax credit (AMTC) that applies in respect of other qualifying medical expenses.
The application of the AMTC system falls into three categories:
(a) Taxpayers aged 65 years and older.
(b) Taxpayer, his or her spouse or his or her child is a person with a disability.
(c) All other taxpayers.
In order to qualify for the AMTC in the “65 years and older” category, the taxpayer must be 65 years or older on the last day of the relevant year of assessment or, had he or she lived, would have been 65 years or older on the last day of the relevant year of assessment.
The two types of credits are dealt with separately in this guide, namely the following:
(i) Part A – the MTC, dealing with contributions to a medical scheme; and
(ii) Part B – the AMTC (which replaced the deduction of the medical allowance) dealing with other qualifying medical expenses, including out-of-pocket expenses.
Qualifying persons for whom contributions may be claimed
Only medical scheme contributions paid by a taxpayer for him or her and his or her dependant(s) may be considered in the determination of an MTC (medical scheme fees tax credit).
Meaning of a “dependant”
Before 1 March 2018, a “dependant” for purposes of the MTC was a “dependant” as defined in section 1 of the Medical Schemes Act. This resulted in a “dependant” for the purpose of the MTC and a “dependant” for the purpose of the AMTC having different meanings. With effect from years of assessment commencing after 1 March 2018, a dependant for purposes of the MTC has the same meaning as a dependant for purposes of the AMTC, that is, a “dependant” as defined in section 6B(1). The amendment ensures alignment of the “dependant” principle under both sections 6A and 6B.
A “dependant” as defined in section 6B(1) means the following:
(a) a person’s spouse;
(b) a person’s child and the child of his or her spouse;
(c) any other member of a person’s family in respect of whom he or she is liable for family care and support; or
(d) any other person who is recognised as a dependant of that person in terms of the rules of a medical scheme or fund contemplated in section 6A(2)(a)(i) or (ii), at the time the fees contemplated in section 6A(2)(a) were paid, the amounts contemplated in paragraph (a) and (b) of the definition of ‘qualifying medical expenses’ were paid or the expenditure contemplated in paragraph (c) of that definition was incurred and paid.
The definition of “dependant” in section 6B(1) includes any other member of a person’s family in respect of whom the person is liable for family care and support. The word “liable” indicates that there must be a legal obligation to support the person before they can qualify as a dependant.
The meaning of “spouse”
The definition of “dependant” includes a reference to a person’s spouse. “Spouse” in relation to any person, means a person who is the partner of that person:
(a) in a marriage or customary union recognised in terms of the laws of the Republic;
(b) in a union recognised as a marriage in accordance with the tenets of any religion; or
(c) in a same-sex or heterosexual union which is intended to be permanent.”
The meaning of “child”
The definition of “dependant” also includes a person’s child and the child of his or her spouse.
A “child” as defined in section 6B(1) means the following:
“a person’s child or child of his or her spouse who was alive during any portion of the year of assessment, and who on the last day of the year of assessment:
(a) was unmarried and was not or would not, had he or she lived, have been
(i) over the age of 18 years;
(ii) the age of 21 years and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of such a year;
(iii) over the age of 26 years and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of such year and was a full-time student at an educational institution of a public character; orb) in the case of any other child, was incapacitated by a disability from maintaining himself or herself and was wholly or partially dependent for maintenance upon the person and has not become liable for the payment of normal tax in respect of that year; ”.
Person paying the contributions
Contributions paid by the taxpayer
Only qualifying contributions that were paid to a registered medical scheme (and that can be proven to have been paid by a taxpayer either directly or indirectly) will be taken into account in determining the MTC that the taxpayer will be entitled to claim. The taxpayer claiming the contributions must be able to prove that he or she actually paid the contributions. More than one taxpayer could pay a portion of the contributions due to a registered medical scheme. The MTC in such cases must be apportioned between each taxpayer that makes payment.
Qualifying contributions paid by a person other than the taxpayer will not be taken into account when the MTC is determined, except for:
- qualifying contributions paid by the estate of a deceased taxpayer for the period up to the date of the taxpayer’s death. These costs are deemed to have been paid by the taxpayer on the day before his or her death; and
- qualifying contributions paid by an employer of a taxpayer, to the extent that the amount has been included in the income of the taxpayer as a taxable benefit.
EXAMPLE 1 – Contributions paid on behalf of a member of a medical scheme
Facts:
X, a friend of Y, paid monthly contributions of R1 000 to Excellent Health SA, a registered medical scheme. The amounts were paid for Y and Y’s spouse and children, who are not dependants of X.
Result:
Y MAY NOT CLAIM AN MTC FOR THE AMOUNTS PAID BY X. X MAY ALSO NOT CLAIM AN MTC FOR THE AMOUNTS PAID FOR Y, SINCE THE CONTRIBUTIONS HAVE NOT BEEN PAID FOR X OR A DEPENDANT OF X.
Contributions to a registered medical scheme
Contributions paid by the taxpayer for him or herself and any “dependant” as defined to a registered medical scheme may be taken into account when the MTC is determined.
EXAMPLE 2 – Contributions to an unregistered medical scheme
Facts:
AA paid monthly contributions of R2 000 to XYZ Health SA as part of a health insurance plan, which is not a registered medical scheme. The contributions are for AA, AA’s mother, AA’s spouse and their two children. They are all considered dependants.
Result:
THE AMOUNTS PAID BY AA WERE NOT PAID TO A REGISTERED MEDICAL SCHEME AND, AS A RESULT, ARE NOT REGARDED AS QUALIFYING CONTRIBUTIONS.
EXAMPLE 3 – Contributions to a registered medical scheme
Facts:
AB paid monthly contributions of R2 000 to ABC Health SA, a registered medical scheme. The contributions are for AB, AB’s mother, AB’s spouse and their two children. They are all considered “dependants” as defined in section 6B(1).
Result:
THE TOTAL MONTHLY CONTRIBUTIONS OF R24 000 FOR THE RELEVANT YEAR OF ASSESSMENT ARE REGARDED AS QUALIFYING CONTRIBUTIONS.
Contributions paid by a taxpayer to ANY registered medical scheme in respect of him or herself and any dependant will be a qualifying contribution. It is not a requirement that the taxpayer’s spouse or dependant, for example, be admitted as a dependant on the taxpayer’s medical scheme in order for the taxpayer to qualify for an MTC. The requirement is that the taxpayer’s spouse or dependant merely be admitted on any registered medical scheme.
EXAMPLE 4 – Contributions to a different medical scheme
Facts:
GE paid monthly contributions of R2 500 to ABC Health SA, a registered medical scheme. The contributions are for GE, GE’s spouse and their two children. They are all considered “dependants” as defined in section 6B(1). GE also paid monthly contributions of R1 500 to Good Health Medical Scheme (a registered medical scheme) for his mother who is dependent on GE for family care and support, and is a “dependant” as defined in section 6B(1).
Result:
The total monthly contributions of R48 000, that is, R30 000 (R2 500 × 12) + R18 000 (R1 500 × 12), are REGARDED AS QUALIFYING CONTRIBUTIONS in GE’s hands in that applicable year of assessment.
CONTRIBUTIONS THAT DO NOT QUALIFY FOR A MEDICAL SCHEME FEES TAX CREDIT
Certain medical-related arrangements are entered into between taxpayers and entities that are not regulated by the MS Act. Products offered by long-term or short-term insurers, which can include, for example, gap cover or hospital insurance, do not qualify for an MTC because they are not paid to a registered medical scheme. Certain bargaining councils establish and operate medical funds. If these funds are not registered under the MS Act, the contributions do not qualify for an MTC.
Contributions to a foreign medical fund
Contributions paid by the taxpayer to any other fund registered under provisions similar to the provisions of the MS Act in the laws of any other country may also be taken into account in the calculation of the MTC. If a foreign fund is not regulated under legislation that is similar to the MS Act, it will not qualify for an MTC.
The next article will discuss medical tax credits.