Firstly, I am sure many of you are aware and have read press releases over the weekend pertaining particularly to the National Health Insurance or NHI as it is referred to. To put all minds at ease, the NHI will not affect any of you in the short term and is to be rolled out over a period of the following 14 years.
Secondly, following our attendance at the Treasury workshop on the 12th August which was held primarily to discuss the proposed conversion of medical deductions to tax credits , various points were raised in great detail and at great length by all that attended and I am pleased to report back that Treasury officials did indeed stand up and take note of these. Treasury did seem to be thankful for the realistic account of what day to day expenses of people in the “disabled” groups experience and hence I say, seemed to take this into account. The general feel at the workshop was that the conversion of medical deductions to tax credits has been accepted, however, there is still much to be looked into, taken into account and decided upon in relation to Out of pocket expenses. What is expected to transpire as of 1 March 2012, is that medical aid contributions will be converted to tax credits. The consequence of this , is that Treasury is proposing to “cap” what we know as a tax deduction, but will become a tax credit, at 30% across the board, irrespective of whichever tax bracket a person may fall into. This is because Treasury is trying to equalise the playing fields between the various income earning groups which are between the 18 – 40 % tax bracket.
Furthermore, with regards to the SARS List of Qualifying physical impairment or disability expenditure that was due to come into effect as of 1 March 2011, we can confirm that the effective date has been moved up to 1 March 2012 in other words this will affect your 2013 tax return.