WARNING: If you help your employee with medical bills, you might be in trouble with SARS!
An employer who helps their worker with much-needed hospital bills is a Good Samaritan, right? That's not what SARS thinks! Whether you pay for an employee's prescription or set up a flu vaccine drive in your office, SARS might penalise you if you don't tax these things correctly. Find out how to get SARS off your back for helping your employees with their medical bills...
SARS doesn't have a conscience. It'll happily penalise you for paying for your employee's wisdom tooth surgery, or even helping her with the nursing fees for an elderly parent.
SARS sees any money you give towards an employee's medical expenses as a fringe benefit
You'd think it'd leave you alone after taxing your medical aid contributions. But no. SARS will see anything listed below as a fringe benefit for your employees:
Paying for their doctor's bills or any other medical services
Paying for their dentist's visits
Paying for their hospital stays
Paying for their nursing fees
Paying for their prescription medicine
Bear in mind, it's not just if you pay for these things outright. If you even contribute a bit towards these costs, it's a fringe benefit. And it's not just for your employee. If you contribute towards the medical costs for your employee's spouse, child, any of their relatives or any of their dependents, it's a fringe benefit.
Helping your employees out with their medical expenses may be a good deed, but it's not a tax perk!
They must provide you with proof of payment of the expense, if you paid their bills. You must tax
this like a medical aid contribution – a fringe benefit.
Remember to keep all proofs of payment for five years in case SARS decides to question your expenses.