Medical Aid Tax Credit: How to treat on EMP201

[J7J]

Hi,

A client sends me their monthly payslips and from there I populate the EMP201. I basically add the PAYE and UIF on the payslips and put these figures on the EMP201 (I double up the UIF for the EMP201 as the payslip only shows the employee's contribution). I then calculate the SDL based on their gross salaries.

There is an employee that has a medical aid fringe benefit, with a resulting Medical Aid Tax Credit. Do I deduct this from the PAYE on the payslip to add to the PAYE on the EMP201?

Please assist.

[Imp]

Hi yes you include it under PAYE on the EMP201

[Dave U]

Hi J7J

That depends on how the payslips are calculated and can vary between different payroll packages. For instance, in Pastel Payroll, the medical aid tax credit is listed as a negative deduction, due to a limitation caused by the way their system is designed. So what they list as the PAYE deduction is not the final PAYE amount, but the pre-tax-credit PAYE. In that case you must deduct the tax credit from the PAYE to get the actual PAYE, which is also the amount used on your EMP201.

Payslips from SimplePay have the PAYE as the final amount that's also used on the EMP201, so with the tax credit already taken into account. The medical aid tax credit is then not listed as a negative deduction itself, but included in a different section for information purposes.

Dave

[J7J]

Thank you!