Unlocking Extra Tax Savings: A Guide to the Additional Medical Expenses Tax Credit (AMTC) in South Africa
If you're a South African taxpayer contributing to a medical aid, you probably know about the standard Medical Scheme Fees Tax Credit (MTC) – that fixed monthly amount that reduces your tax bill. But did you know there's another, often overlooked, credit you might be entitled to?
It’s called the Additional Medical Expenses Tax Credit (AMTC), or Section 6B credit, and it's designed to provide relief for qualifying medical expenses that you had to pay for out of your own pocket. Let's break down what it is, who can claim it, and how it's calculated.
What is the AMTC?
The AMTC is a tax credit you can claim for medical costs not covered by your medical aid. This includes payments to registered medical professionals, hospital stays, prescribed medicines, and other qualifying expenses.
Unlike the MTC, which is a fixed amount, the AMTC is calculated based on your actual spending, your income, your age, and whether you or a close family member has a disability.
Who Can Claim the AMTC?
Any taxpayer who pays for qualifying medical expenses can potentially claim the AMTC. However, the calculation and the amount you can claim fall into three main categories.
How the AMTC is Calculated: Scenarios & Examples
The way your AMTC is calculated depends on your circumstances. Let's look at the three main scenarios.
Scenario 1: Taxpayers 65 or Older
If you (the taxpayer paying the contributions) are 65 years of age or older, the calculation is more generous.
You can claim a credit of 33.3% (one-third) of: * Your total out-of-pocket qualifying medical expenses, PLUS * The portion of your medical aid contributions that exceeds 3 times your standard MTC.
Example: * Age: 68 * Total Annual Medical Aid Contributions: R70,000 * Total MTC for the year: R8,736 (for self and spouse) * Out-of-Pocket Medical Expenses (e.g., dentist, physio, prescriptions): R15,000
- Calculate 3x MTC: 3 x R8,736 = R26,208
- Find Excess Medical Aid Contributions: R70,000 - R26,208 = R43,792
- Sum with Out-of-Pocket Expenses: R43,792 + R15,000 = R58,792
- Calculate the AMTC: 33.3% of R58,792 = R19,578
This R19,578 is a direct credit that reduces your final tax bill.
Scenario 2: Taxpayers with a Disability (Self, Spouse, or Child)
If you, your spouse, or your child has a disability as defined by the Income Tax Act, the calculation is the same as for those 65 or older, regardless of your age.
You can claim a credit of 33.3% (one-third) of: * Your total out-of-pocket qualifying medical expenses (including disability-specific costs like special schooling or assistive devices), PLUS * The portion of your medical aid contributions that exceeds 3 times your standard MTC.
Important Note: This more generous calculation is specifically for a disability concerning the taxpayer, their spouse, or their child. If you are supporting another dependant with a disability (e.g., a parent), those expenses would fall under the next scenario.
Scenario 3: All Other Taxpayers (Under 65, No Disability)
This is the most common category. The calculation has an additional threshold based on your income.
You can claim a credit of 25% of the total qualifying medical expenditure that exceeds 7.5% of your taxable income.
Example: * Age: 40 * Taxable Income for the year: R450,000 * Total Annual Medical Aid Contributions: R60,000 * Total MTC for the year: R11,688 (for self, spouse, and one child) * Out-of-Pocket Medical Expenses: R12,000
- Calculate 4x MTC: 4 x R11,688 = R46,752
- Find Excess Medical Aid Contributions: R60,000 - R46,752 = R13,248
- Sum with Out-of-Pocket Expenses: R13,248 + R12,000 = R25,248
- Calculate the 7.5% Income Threshold: 7.5% of R450,000 = R33,750
- Determine if Expenses Exceed Threshold: In this case, R25,248 is less than R33,750.
- Calculate the AMTC: Since the expenses do not exceed the 7.5% income threshold, the AMTC is R0.
If this person's out-of-pocket expenses were R25,000 instead, their total qualifying expenditure would be R13,248 + R25,000 = R38,248. The amount exceeding the threshold would be R38,248 - R33,750 = R4,498. The AMTC would then be 25% of R4,498 = R1,124.50.
Key to Claiming the AMTC: Keep Your Slips!
You cannot claim the AMTC without proof. It is absolutely essential to:
- Keep all receipts for payments to doctors, dentists, specialists, pharmacies, physiotherapists, etc.
- Keep all prescriptions for medicines.
- Get a detailed statement from your medical aid at the end of the tax year showing all claims and out-of-pocket amounts.
- Maintain a clear record of your spending throughout the year.
When you complete your annual tax return via SARS eFiling, there is a specific section for medical expenses where you will declare these amounts.
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