Personal tax alert: Here's how the National Budget's changes to medical tax credits affect you

by , 05 March 2014

Growing your money is one thing, but if you really want to be wealthy, you need to protect it too. And one of the best ways to do this is by taking advantage of our taxes. Today, we explore how the changes Pravin Gordhan made to the medical tax credit system in his National Budget affects you…

Significant changes to medical tax credits were made in this year’s National Budget

If you contribute to a medical scheme, you can look forward to more money coming your way.

Why?

Because, as FSP Business explains, for tax year 2014/15, the maximum amount you can deduct from your tax if you contribute to a medical scheme has increased.

It’s gone up from R242 to R257 a month for your first two dependents. And increased from R162 R172 for any of your other dependents.

But, in reality, this isn’t as good as it sounds…

These National Budget medical tax credit changes don’t benefit everyone

iol warns that only those with a lower tax rate will benefit. This because the tax credits are “calculated as a credit for tax charged at a rate of 30% on the rand amount that was previously allowed as a deduction for contributions to a medical scheme, but adjusted for inflation.”

In addition, while you’re getting more money back from taxes (a 6.2% increase to be exact), this is nowhere close to the 9% increase in medical scheme contributions you’ll pay this year.

Although you can’t do anything about this, if you file your own tax return each year, it’s vital you know how to work out your medical tax credits correctly now that they’ve been changed in the National Budget. For help with this, go here. 

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