VIP Payroll

5.3.1 Medical Tax CreditsFrom 1 March 2012, Medical Aid is no longer a tax deductible deduction foremployees who are younger than 65.An employee who is younger than 65 is entitled to medical tax credits inrespect of medical scheme contributions paid by the employee. Employersmust take into account contributions paid by an employee, as well as theemployer which is taxed as a fringe benefit, to a registered medical scheme.The monthly medical tax credit amounts are:• R242 for the main member,• R242 for the first dependant and• R162 for each additional dependant.Medical tax credits (rebates) must be deducted from the normal employees’tax calculated for the month.5.4 Payroll GivingThe medical tax credit amounts have not yet been promulgated attime of printing.Employers must take into consideration any donation made by the employeethat is paid over by the employer on behalf of the employee and for which theemployer is issued a S18A(2)(a) tax receipt.The maximum value of any donation that may be deducted from remunerationis limited to 5% of balance of remuneration, before taking into account thepayroll giving deduction.6. FRINGE BENEFITSThe term fringe benefit refers to payments made to employees in a form otherthan cash. A taxable benefit is deemed to have been granted by the employerto the employee if such benefit is granted as a reward for services rendered orto be rendered.The Income Tax Act specifies in the Seventh Schedule how to calculatethe value of the benefit that accrues to the employee for employees’ taxpurposes. The Commissioner uses market value for some types of benefits,cost price for others and special formulae for the rest.Payroll Pocket Guide 2013|2014© 2013 Sage VIP27