The 2013 Budget announced that the medical schemes tax credit was increased from R230 to R242 for each of the taxpayer and the first dependent and from R154 to R162 for each additional dependant. "The inflation-linked increase in the medical schemes tax credit is the minimum increase the FIA would have expected," said Gregory Setzkorn, chairman of the health care committee of the FIA. "While individual taxpayers will no doubt enjoy the additional tax relief, the concession does not go far enough to encourage new entrants to the medical schemes industry."
There is good news for the over-65s. "Taxpayers 65 and older may claim as a deduction all qualifying medical expenditures not covered by their respective medical schemes," said Setzkorn. "They can also claim a deduction for medical scheme contributions exceeding four times the amount of the medical schemes tax credits."
Gavin Came, chairman of the financial planning committee of the FIA, welcomed the retirement reform update that was published alongside the 2013 Budget. "The note sets out the National Treasury's latest thinking on a wide range of retirement reform issues, including the taxation of retirement fund contributions and withdrawals, preservation of accumulated retirement savings, and the treatment of non-retirement savings," said Came. "It is now up to industry stakeholders to engage further with the Treasury on these proposals by the stated 31 May, 2013, deadline. The FIA looks forward to representing the views of its member intermediaries to government in this regard.
"Reforming South Africa's retirement landscape is a difficult balancing act," he added. "The National Treasury has to accommodate both individuals that have been saving for many years under the old dispensation while at the same time recognising the urgency of the reform process.
"The FIA believes that the Treasury's '2015 or later' approach to many of its proposals, particularly where pre- and post-retirement preservation are concerned, make sense given the amount of stakeholder consultation that still has to take place."
Pieter Cronjé, chairman of the employee benefits committee at the FIA, commented on employee benefit-related announcements: