I see a new field on the ITR12 questions for individuals - 'did you pay any medical expenditure including med scheme contributions where you are not the principal member, in respect of any immediate family member who is dependant on you for family care &
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
In terms of section 6A(2)(a)(i), the medical scheme fees tax credit applies in respect of fees paid by the person to a medical scheme registered under the Medical Schemes Act. The amount of the rebate then depends on whether or not it was paid in respect of the person (the taxpayer) or a dependent. In terms of the Medical Schemes Act, 1998, “dependant” means:
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the spouse or partner, dependent children or other members of the member's immediate family in respect of whom the member is liable for family care and support; or
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any other person who, under the rules of a medical scheme, is recognised as a dependant of a member.
The law doesn’t require the person making the contribution to be a member of the medical scheme. SARS confirms this in the guide on the medical credits. It rather comes down to whether the granddaughter is any “other member(s) of the member's immediate family in respect of whom the member is liable for family care and support”. In this regard, SARS explains it as follows in their guide:
“The term “immediate family” in the definition of “dependant” in the MS Act refers to a particular group of relatives used in rules of law. This group is limited to a person’s spouse or life partner, parents (including adoptive and step-parents), children (including adopted and step-children) and siblings.”
We don’t have information to comment on the “liable for family care and support” part, but the granddaughter may well not fall in that category. She would then have to be “recognised as a dependant of a member”.
The same principles apply to the grandmother (the second example).
Note, for purposes of section 6B, it is also the person who paid the contributions who is entitled to the rebate. With regard to the qualifying medical expenses, the rebate is also only available to the person who paid the qualifying expenses. The definition of dependent, for purposes of the section 6B rebate is different to the one above. A “dependant” (for section 6B purposes) means—
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a person’s spouse;
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a person’s child and the child of his or her spouse;
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any other member of a person’s family in respect of whom he or she is liable for family care and support; and
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any other person who is recognised as a dependant of that person in terms of the rules of a medical scheme or fund contemplated in section 6A (2) (a) (i) or (ii),
at the time the fees contemplated in section 6A (2) (a) were paid, the amounts contemplated in paragraph (a) and (b) of the definition of “qualifying medical expenses” were paid or the expenditure contemplated in paragraph (c) of that definition was incurred and paid.
So, section 6B doesn’t have the ‘immediate family’ qualification. SARS agrees with this and explains it as follows:
“The definition of “dependant” in section 6B(1) has been widened and now includes any other member of a person’s family in respect of whom the person is liable for family care and support.”
“The phrase “any other member of a person’s family” includes relations by blood, adoption and marriage, etc.”