Income Tax Act, 1962 (Act No. 58 of 1962) > Chapter II : The Taxes > Part I : Normal Tax > 12M. Deduction of medical lump sum payments

(1) For the purposes of this section—

"dependant",

in relation to a former employee, means a spouse or any dependant (as defined in section 1 of the Medical Schemes Act);

[Definition substituted by section 39 of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013]

"insurer"

means an insurer as defined in section 29A.

(2)	In determining the taxable income derived by any taxpayer in any year of assessment from carrying on any trade, there must be allowed as a deduction from the income of that taxpayer so derived any amount paid by way of a lump sum during the year of assessment by that taxpayer—

[Words preceding section 12M(2)(a) substituted by section 28(1) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010)]

(a)	to any former employee of the taxpayer who has retired from the taxpayer’s employ on grounds of old age, ill health or infirmity or to any dependant of that former employee; or

(b)	under any policy of insurance taken out with an insurer solely in respect of one or more former employees or dependants contemplated in paragraph (a),

but only to the extent that the amount is paid for the purposes of making any contribution, in respect of any former employee or dependant contemplated in paragraph (a), to any medical scheme or fund contemplated in 6A(2)(a)(i) or (ii):

[Words following section 12M(2)(b) substituted by section 30(1) of the Taxation Laws Amendment Act, 2012 (Act No. 22 of 2012) - effective 1 March 2014]

Provided that no deduction may be allowed in terms of this section if the taxpayer making the payment, or a connected person in relation to that taxpayer, retains any further obligation, whether actual or contingent, relating to the mortality risk of any former employee or dependant contemplated in paragraph (a).

[Section 12M inserted by section 28(1) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]