Consider a tax credit as a magical ticket that reduces your tax liability. It differs from a tax deduction because it does not reduce your taxable income. No, a tax credit directly addresses the issue by lowering taxable income. Typically, taxpayers who fulfill specific requirements or do actions that benefit the economy or society are awarded these golden tickets. The South African Revenue Service (SARS) taxman distributes a range of tax credits. These include the property rates tax credit, the investment tax credit, the tax credit for medical scheme
What is the SARS tax credit?
SARS tax credit means any tax credit that SARS manages. A tax credit lowers the tax that a taxpayer owes. SARS tax credits are for taxpayers who qualify or do good things for society or the economy. SARS tax credits have different shapes, like fixed, percentage, or reduction. Some SARS tax credits are:
- Medical scheme fees tax credit: Taxpayers who pay medical scheme fees for themselves and their dependants get this tax credit. It is a fixed amount every month that grows with more dependants. It is not refundable, so it only lowers the tax and does not carry over. It helps with medical costs and makes things fairer and more equal.
- Investment tax credit: Taxpayers who invest in certain sectors or industries that are important or helpful for the country get this tax credit. It is a percentage of the investment and changes with the kind and length of the investment. It boosts economy, jobs, innovation, and competition.
- Economic development tax credit: Taxpayers who join certain projects or programs that improve the economy of some regions or communities get this tax credit. It depends on the project or program and considers things like jobs, investments, or industry. It backs regional development, social improvement, and change.
- Property rates tax credit: Taxpayers who own property in some municipalities that give property rates discounts get this tax credit. It is the same as the property rates discount the municipality gives and differs with income, property, and ownership. It helps property owners and supports home ownership.
Who qualifies for a medical tax credit?
The medical scheme fees tax credit lowers the tax for taxpayers who pay medical scheme fees for themselves and their dependents. The tax credit is a fixed monthly amount that grows with more dependants. It is not refundable, so it only lowers the tax and does not carry over. It helps with medical costs and makes things fairer and more equal.
To secure the tax credit, a taxpayer must be a person, not a body. They must forward fees to an authorized medical scheme or fund for themselves and their dependents. They should display proof of clearance, like a tax cert or a receipt.
The 2024/2024 tax credit rates are:
- R364 per month for the taxpayer or a dependent who is a member or dependent of a scheme or fund.
- R728 per month for the taxpayer and one dependent or for two dependents.
- R246 per month for each extra dependant.
Who qualifies for tax rebates in South Africa?
A tax rebate lowers the tax that a taxpayer pays. A tax credit lowers the tax that a taxpayer owes, but a tax rebate lowers the tax after it is calculated. Tax rebates are for all taxpayers or some taxpayers based on age, income, or situation. In South Africa, these tax rebates are:
- Primary rebate: All individuals, not entities, get this tax rebate. It is a fixed amount that lowers the tax. It sets the tax threshold, the income below which no tax is paid. The 2024/2024 primary rebate is R17,235.
- Secondary rebate: Individuals 65 or older get this tax rebate. It is more money that lowers the tax after the primary rebate. The 2024/2024 secondary rebate is R9,444.
- Tertiary rebate: Individuals 75 or older get this tax rebate – the extra money that lowers the tax after the primary and secondary rebates. The 2024/2024 tertiary rebate is R3,145.
How do I know if I qualify for a SARS tax return?
A tariff return is a record you answer and forward to SARS to declare to them your earnings, outlays deductions, and tariff credits for a SARS tax year. It shows your tax liability or tax refund. In addition, a tax liability is the tax you owe to SARS, and a tax refund is the tax SARS owes you.
To see if you need a tax return, check these criteria:
- You are a registered taxpayer with a tax number. If not, register online on the SARS website or at a SARS branch.
- You earned income above the tax threshold for the tax year. The tax threshold is the income where no tax is paid, and it changes with age and rebates. The 2024/2024 tax thresholds are:
| Age | Threshold |
| <65 | 87,300 |
| 65-74 | 135,150 |
| >75 | 151,100 |
- You earned income or capital gain from sources other than one employer, like interest, rent, dividends, foreign income, etc.
- You enjoyed an allowance from your employer, like travel, subsistence, or office bearer. Check your IRP5/IT3(a) to see your allowances.
- You had funds or assets in foreign currency or outside South Africa worth more than R250,000 at any time in the tax year.
- You joined a venture capital company, a controlled foreign company, or a small business corporation.
- You got a tax return from SARS, or SARS asked you to send a tax return for the tax year.
What is the tax credit for medical schemes in 2024?
In 2024, taxpayers who pay fees to a registered medical scheme or a similar fund outside South Africa for themselves and their dependents will be eligible for a tax credit. This tax credit is a set monthly amount that grows with the number of dependents. However, it’s important to note that this tax credit is non-refundable. That means it can only lower your tax and won’t roll over to the next assessment year.
