Taxpayers over the age of 65 who belong to medical schemes may see an increase in their monthly incomes if National Treasury’s proposals to amend the Pay As You Earn (PAYE) and provisional tax calculations are implemented.
All taxpayers who contribute to a medical scheme are entitled to a tax credit of up to R270 a month for the main member and the first dependant on the scheme and up to R181 a month for each additional dependant. This is known as the medical scheme contribution tax credit.
Taxpayers over the age of 65 are also entitled to a tax credit of 33.3 percent of their qualifying medical expenses, and a tax credit of 33.3 percent of the amount by which their contributions exceed three times the medical scheme contribution tax credit. Currently, these tax credits are not taken into account when monthly PAYE deductions and provisional tax are calculated; they must be claimed on assessment at the end of the tax year. As a result, some over-65s have experienced cash-flow problems during the year.
Therefore, National Treasury has proposed that medical tax credits related to medical scheme contributions by people over 65 should be taken into account to reduce both monthly PAYE and the calculation of provisional tax.
If the proposal is implemented, it will take effect on March 1, 2016.
TAX AMENDMENT BILLS PUBLISHED
National Treasury on July 22 published, for public comment, the Draft Taxation Laws Amendment Bill and the Draft Tax Administration Laws Amendment Bill, which provide the legislative amendments required to implement most of the tax proposals announced in the 2015 Budget in February.
The legislation is available on National Treasury’s website, www.treasury.gov.za
Written comments should be emailed to Adele Collins and Nomalizo Bulisile by August 24, at [email protected] and [email protected]