Medical aid contributions: New rules confuse me
Question
I’m a little confused regarding PAYE deductions and medical aid contributions. For tax year 2011, do we now deduct PAYE from total amount of company medical aid contribution, including the capped amount?
Answer
Yes, the total amount of employer’s medical aid contributions must be included in die calculation of the taxable income. The capped amount calculated has to be deducted in the calculation of the taxable income.
How has this changed from the tax rules of previous years? The difference lies in the way it’s shown on the IRP5 certificate. The company’s contributions will be shown as a fringe benefit under code 3810. The contributions paid by the employer as well as the employee will be shown against code 4005.
