Medical funds and annuities

Different ways to display medical aid contributions on employees’ pay slips.

NB: Before inserting these items on any pay slips, please confirm with your accountant/broker/employee whether the employee has a medical aid OR medical insurance plan. If the incorrect option is selected the PAYE will be calculated incorrectly. It is your responsibility as an employer to ensure that the correct PAYE amount is paid over to SARS.

Create pay slip items:

1. Employer gives a partial contribution (i.e. 50%)

1.1. Where the employer pays the instalment over to the medical scheme o.b.o. employee:

1.2. Where the employee pays the instalment over to the medical scheme:

2. Employer gives 100% contribution

2.1. Where the employer pays the instalment over to the medical scheme o.b.o. employee:

2.2. Where the employee pays the instalment over to the medical scheme:

3. Employer gives no contribution, but pays the instalment over to the medical scheme o.b.o. employee:

4. Employee pays for their own medical scheme, but wants the tax benefit:

Create pay slip items:

(Only if the items aren't displayed on the prepopulated pay slip items list)

Contribution description	Pay slip item to use	SARS code
Employer contribution	Medical aid contributions by employer	3810
Screen	Steps
	- Pay; - Pay slip items; - Insert; - Wage or deduction? Choose Wage; - Select item from list: Choose Fringe benefits.
	- Locate and click on Medical aid contributions by employer; - Click on Select.
	- Item type: Choose one of the following options from the dropdown list: · General (fixed amount) · % of fixed wage · % of total wages due - Click on OK (add pay item).
Contribution description	Pay slip item to use	SARS code
Employee/member contribution	Medical aid contribution	4005
Screen	Steps
	- Pay; - Pay slip items; - Insert; - Wage or deduction? Choose Deduction; - Locate and click on Medical aid contribution; - Click on Select.
	- Item type: Choose one of the following options from the dropdown list: · General (fixed amount) · % of fixed wage · % of total wages due - Click on OK (add pay item).

Contribution description	Pay slip item to use	SARS code
Employee contribution reimbursement to add amount to employee’s nett pay	Reimbursement medical/pension	None
Screen	Steps
	- Pay; - Pay slip items; - Insert; - Wage or deduction? Choose Wage; - Select item from list: Scroll down on dropdown list to locate and click on Reimbursement medical/pension; - Click on Next.
	- Item type: Choose one of the following options from the dropdown list: · General (fixed amount) · % of fixed wage · % of total wages due - Click on OK (add pay item).

1. Employer gives a partial contribution (i.e. 50%)

1.1. Where the employer pays the instalment over to the medical scheme on behalf of employee:

Contribution description	Pay slip item to use	SARS code
Employer contribution	Medical aid contributions by employer	3810
Employee/member contribution	Medical aid contribution	4005
Screen	Steps
	Add employer contribution item to pay slip: - Description: Select Medical aid contribution by employer; - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 and the employer contributes 50% - The R3000 should be given as a wage to the employee. - Click on OK (Save).
	Add employee contribution item to pay slip: - Description: Select Medical aid contribution; - No. of dependents: The total number of dependents (member included) should be specified when employee/member contribution is inserted on the pay slip. Medical scheme tax credit is also calculated according to this amount. - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 – This amount should be inserted here. In effect the employee only pays R3000 (50%), but the total amount must be deducted. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation.

1.2. Where the employee pays the instalment over to the medical scheme:

Contribution description	Pay slip item to use	SARS code
Employer contribution	Medical aid contributions by employer	3810
Employee/member contribution	Medical aid contribution	4005
Employee contribution reimbursement to add amount to employee’s nett pay	Reimbursement medical/pension	None
Screen	Steps
Add employer & employee contribution items to pay slips: Please follow the first two steps as laid out above.
	Add employee contribution reimbursement item to pay slip: - Description: Select Reimbursement medical/pension; - Amount: This amount must be equal to the employee’s contribution (in this example R6000) that was previously deducted. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation. Nett pay will be increased by R6000, as the medical scheme's instalment will be deducted from the employee’s salary.

2. Employer gives 100% contribution

2.1. Where the employer pays the instalment over to the medical scheme o.b.o. employee:

Contribution description	Pay slip item to use	SARS code
Employer contribution	Medical aid contributions by employer	3810
Employee/member contribution	Medical aid contribution	4005
Screen	Steps
	Add employer contribution item to pay slip: - Description: Select Medical aid contribution by employer; - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 and the employer contributes 100% - The R6000 should be given as a wage to the employee. - Click on OK (Save).
	Add employee contribution item to pay slip: - Description: Select Medical aid contribution; - No. of dependents: The total number of dependents (member included) should be specified when employee/member contribution is inserted on the pay slip. Medical scheme tax credit is also calculated according to this amount. - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 – This amount should be inserted here. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation.

2.2. Where the employee pays the instalment over to the medical scheme:

Contribution description	Pay slip item to use	SARS code
Employer contribution	Medical aid contributions by employer	3810
Employee/member contribution	Medical aid contribution	4005
Employee contribution reimbursement to add amount to employee’s nett pay	Reimbursement medical/pension	None
Screen	Steps
Add employer & employee contribution items to pay slips: Please follow the first two steps as laid out above.
	Add employee contribution reimbursement item to pay slips: - Description: Select Reimbursement medical/pension; - Amount: This amount must be equal to the employee’s contribution (in this example R6000) that was previously deducted. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation. Nett pay will be increased by R6000, as the medical scheme's instalment will be deducted from the employee’s salary.

3. Employer gives no contribution, but pays the instalment over to the medical scheme o.b.o. employee:

Contribution description	Pay slip item to use	SARS code
Employee/member contribution	Medical aid contribution	4005
Screen	Steps
	Add employee contribution item to pay slips: - Description: Select Medical aid contribution; - No. of dependents: The total number of dependents (member included) should be specified when employee/member contribution is inserted on the pay slip. Medical scheme tax credit is also calculated according to this amount. - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 – This amount should be inserted here. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation. Nett pay after the deduction of medical scheme tax credit and medical scheme instalment is paid.

4. Employee pays for their own medical scheme, but wants the tax benefit:

Contribution description	Pay slip item to use	SARS code
Employee/member contribution	Medical aid contribution	4005
Employee contribution reimbursement to add amount to employee’s nett pay	Reimbursement medical/pension	None
Screen	Steps
	Add employee contribution item to pay slips: - Description: Select Medical aid contribution; - No. of dependents: The total number of dependents (member included) should be specified when employee/member contribution is inserted on the pay slip. Medical scheme tax credit is also calculated according to this amount. - Amount: I.e. If the total medical aid contribution (instalment paid over to medical scheme) is R6000 – This amount should be inserted here. - Click on OK (Save).
	Add employee contribution reimbursement item to pay slips: - Description: Select Reimbursement medical/pension; - Amount: This amount must be equal to the employee’s contribution (in this example R6000) that was previously deducted. - Click on OK (Save).
	Example of pay slip: PAYE will be adjusted according to the medical scheme tax credit calculation. Nett pay after the deduction of medical scheme tax credit and medical scheme instalment is reimbursed.

Medical funds and annuities

The online help was made with Dr.Explain