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Medical tax credit up only six percent

Personal Finance
If you belong to a medical scheme, from March 1 you will be able to deduct from the tax you owe a medical tax credit of R303 a month for yourself and the first dependant you register on the scheme, according to changes announced in this week’s budget.

If you have more dependants registered on the scheme, you will be able to deduct R204 a month for each of them.

These amounts have increased from R286 and R192 respectively for the current tax year, and represent increases of just less than or more than six percent.

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Medical scheme contributions typically increase by a few percentage points more than the inflation rate each year.

According to Alexander Forbes’s Diagnosis publication, over the past 16 years, inflation as measured by the Consumer Price Index averaged 5.7percent, while medical scheme contribution inflation was 7.6percent a year, a difference of at least 1.9percent a year.

However, the increases announced for 2017 were higher than in previous years, and ranged from 10 to 17 percent, following a significant increase in hospital claims. 

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