MEDICAL AID TAX CREDITS

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Medical Aid Tax Credits for Pensioners

Pensioners that have a medical aid contribution, and are 65 years and older, are entitled to a tax credit. This is an after-tax refund. The refund is calculated and based on the number of dependants and only affects members that have PAYE and Medical Aid.

The number of dependants must be loaded on the Medical Aid deduction line on Everest. The member already counts as one. Only the number of additional dependants, over and above the member, should be captured in this field. If the number of dependants changes then the Medical Aid deduction line should be terminated and a new line must be loaded. The individual information of the dependants is not needed.

EXAMPLE:

If the number 1 is loaded in the “No. of Dependants” column the system will calculate the Tax Credit as Member + 1 = 2 dependants.

If the number 3 is loaded, then the system will calculate a Member + 3 = 4 dependants.

If no dependants have been loaded, the system will assume that there is only one dependant and assign the tax credit applicable to the current tax year. If there are two dependants, the tax credit will be doubled. In accordance to the current tax year’s rebate allocation, an amount will be added for each additional dependant.

The Medical Aid tax credit cannot be more than the Total PAYE that the member pays. If the member has only 1 dependant and the PAYE is R200.00 then the Medical Aid tax credit will be limited to R200.00.

If there is no line for Medical Aid, then the system will not calculate the Tax Credit.

SUMMARY:

The prerequisite for the system to calculate the tax refund is based on the number of dependants that have been loaded onto the system.

The following 3 steps can be used to identify if the pensioner is entitled to the Medical Aid Tax Credit.

1. Check if the pensioner pays PAYE?

If there is no PAYE, the tax credit is not applicable.

2. Have the total dependants been loaded on the Member Payment screen?

The Medical Tax Credit will not be calculated if the total dependants have not been loaded onto the system.

3. Does the member have a Medical Aid line loaded on the Member Payment Screen?

The system will not calculate the Tax Credit if the medical aid line has not been loaded.

At the end of the year the “Gross” PAYE and total “Medical Aid Tax credit” needs to be reported to SARS.

There are individual 2000/227 records that are loaded in the accounts. PAYE and Medical Aid Tax credits are recorded separately.

The system automatically generates a line and will show a R0.00 amount for every member who contributes to a medical aid.

There will also be a separate line in the Member Payments Update report for the Tax Credit. The amount will reflect in the PAYE column as a negative value.

Disclaimer and Copyright

DISCLAIMER

Please note, whilst care is taken to illustrate numerous scenarios, it is impossible to detail all instances and therefore this document should merely serve as a guide for the purposes of demonstrating system functionality and conducting employee training.

In accordance with the above paragraph, this training manual is published and distributed on the basis that EBSphere (Pty) Ltd is not responsible/accountable for any actions taken by users of information contained in this training manual nor for any error in or omission from this manual.

EBSphere (Pty) Ltd does not accept any responsibility whatsoever for a misrepresentation performed by any person in respect of claims, losses or damage or any other matter, either direct or consequential arising out of or in relation to the use and reliance, whether wholly or partially, upon any information contained or products referred to in this manual.

Further, the contents of this training manual are subject to change without any notice and further highlight the need for this training manual to serve only as a guide.

COPYRIGHT

This documentation and the software described in it is the exclusive property of EBSphere (Pty) Ltd. This manual or the software may not be copied in whole or part, without the express written consent of EBSphere (Pty) Ltd. Under the law, copying includes translating into another language or format.

EBSphere (Pty) Limited

P.O. Box 785803

Sandton

2146