With the 2025 annual tax filing season underway, many South Africans who have incurred significant out-of-pocket medical expenses during the year of assessment, continue to enquire about how they can possibly claim an additional medical tax credit to lower their tax liability.

Section 6B of the Income Tax Act permits an additional medical tax credit. This allows for an additional medical tax credit claim (“AMTC”) on the condition that the out-of-pocket expenses align with the definition of qualifying medical expenses, as set out in the Act.

Taxpayers who incurred qualifying medical expenses and have been able to fully support their claims, have seen the benefits. In practice, successful medical tax credit claims have amounted to additional medical tax credit claims between R2 000 and R100 000 per tax year, stemming from out-of-pocket expenses incurred such as, laboratory test results to expenses for a dependent suffering from a disability, to mention a few.

The Council of Medical Schemes’ latest Industry Report confirms that at least R40-billion in out-of-pocket payments have been incurred by medical aid members during the 2023/2024 tax period. This explains why so many taxpayers who incur significant qualifying out-of-pocket expenses, continue to enquire on their possibility to claim the additional medical tax credit.

What to Consider When Claiming your AMTC

A significant practical challenge in claiming the additional medical tax credit lies in the requirement for adequate substantiation. Taxpayers cannot merely include medical expenses in their tax return and assume that the corresponding credit will be granted, without adequate substantiation. 

The burden of onus of proof lies with the taxpayer and Sars requires supporting documentation for all amounts claimed as qualifying medical expenses. This includes tax invoices, detailed schedules and medical scheme tax certificates issued by medical aid administrators. Where the taxpayer has incurred medical expenses directly related to a disability, Sars further requires the taxpayer to submit a completed ITR-DD form, which is a formal confirmation from a registered medical practitioner.

Taxpayers often overlook the obligation to retain supporting documentation for a minimum of 5 years, in accordance with the Tax Administration Act (TAA). Without these documents, even valid claims may be disallowed, underscoring the importance of diligent and proactive record-keeping. 

How does the AMTC work?

Qualifying medical expenses

The term “qualifying medical expenses” is broad. It includes amounts that were paid during a tax year to registered medical practitioners, such as doctors, dentists, optometrists, osteopaths, herbalists, physiotherapists, chiropractors, or orthopaedists for professional services rendered, or medicines supplied to the taxpayer or their dependants.

It also includes payments to hospitals or nursing homes, registered or enrolled nurses, midwives, or nursing assistants for illness or confinement, as well as payments to pharmacists for prescribed medicines. It further includes other medical expenses prescribed by Sars, incurred by the taxpayer due to a disability or mental impairment affecting either the taxpayer or their dependent.

Out-of-pocket medical expenses

In addition to the above, for medical expenses to meet the definition of “qualifying medical expenses”, they would also need to be “out-of-pocket”. In other words, the medical expenses would have to be unrecoverable by the taxpayer or their spouse, from any person including medical aid funds. The taxpayer must have solely borne the costs.

A dependent, as defined

A dependant, according to section 6B (1), means a spouse, a child and/or the child of a spouse, or any other member of the family, who is in the care and support of the taxpayer. 

Determining the tax credit

The availability and extent of a tax credit depends not only on the amount spent, but also on personal circumstances, such as the income level, the age or disability status of the taxpayer or his or her dependent. In ordinary cases, relief only applies if your medical expenses and excess contributions exceed 7.5% of your taxable income, and even then, only 25% of the excess is claimable. 

Importantly, earning more income while incurring more medical expenses does not necessarily result in a higher tax credit, since a higher income raises the threshold you must exceed, and the relief is calculated on only a portion of the excess. 

On the other hand, earning less income while incurring relatively higher medical expenses will most likely mean that you will claim a higher tax credit. Simply put, there is an inverse relationship between the expenses a taxpayer incurs and their taxable income after deductions.

Interestingly, the calculation of the AMTC is more lenient in cases where either the taxpayer or their child and/or spouse is disabled, or the taxpayer is 65 years and older. In such cases, 33.3% of the sum of all qualifying medical expenses and the excess medical aid contributions, is claimed. Similarly, understanding which category you fall under is essential before claiming.

Conclusion

While the additional medical tax credit is available to provide relief for qualifying medical expenses, determining eligibility and calculating the correct credit requires careful consideration. Taxpayers are strongly advised to consult a trusted tax practitioner to assess their specific situation and ensure compliance with the relevant provisions.

Written by Tshepo Thebyane, Senior Tax Consultant at Tax Consulting South Africa; and Priscilla Sefoka, Tax Consultant at Tax Consulting South Africa