Treasury officials said the new system was designed to equalise the benefit across income levels and prevent the affluent from netting more from medical aid deductions than poorer workers.

Member will be given a credit towards tax payable of R230 each for the primary member and one dependent and R154 a month for each additional dependent.

Members will still be able to claim medical expenses not covered by medical insurance as a deduction against taxable income and the cost of insurance that is above four times the medical tax credit where that total amounts to more than 7.5% of taxable income.

Taxpayers currently are allowed to claim a capped share of their medical aid contributions as a deduction from their taxable income.

In two examples presented by the Treasury, it calculates:

• A worker who earns R16040 a month and contributes R2263 for himself and three dependants would be R202 rand a month better off. After the application of other tax concessions announced yesterday, however, that person would be R317 better off in total.

• Someone earning R48750 a month who pays R5506 to a medical aid for herself and three dependants would take home R114 less under the new deal. Taking other tax concessions into account, however, that person would be R224 better off overall.