When it comes to medical aid benefits and taxation, the way in which you deduct your medical aid expenses and medical aid contributions has changed.
So it is important for you to understand how to treat these changes.
In understanding medical benefits and taxation, here are eight instances in which you can pay an employee's medical benefit tax-free as well as two tax-free medical aid contributions:
Eight instances in which you can pay an employee's medical benefit tax-free
Having said that, these instances are:
Your company is a medical aid and you cover the medical expenses within your company's scheme or programme;
You're not a medical aid and you cover medical expenses in terms of your company's scheme or programme and the employee isn't on a medical aid;
You're not a medical aid and you cover medical expenses in terms of your company's scheme or programme and the employee is on a medical aid but it refunds you;
You pay the medical expenses in order to comply with South African law;
You pay the medical expenses of a retired employee or his dependants after death if he retired because of ill health or any other infirmary;
You pay an employee's dependants' medical expenses after his death. This is if the employee dies while under your employ.
You pay the medical expenses of an employee who is 65 years or older; and
You provide medical services to your employees and at their place of work for the better performance of their duties. An example being onsite doctors.
Two tax-free medical aid contributions
You pay the medical aid contributions of a retired employee or his dependants after his death. This is if he retired because of ill health or any other infirmary; or
You pay an employee's dependants' medical aid contributions because of the employee's death whilst under your employ.
It is worth noting that the above-mentioned eight instances in which you can pay an employee's medical benefits tax-free are considered to have 'No value'. This means that your employees don't have to pay PAYE on medical values and medical aid contributions. In other words, they have 'no value' for PAYE purposes.
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