I was wondering if u can maybe assist me. I?%u20AC%u2122m studying payroll and sars returns, I have an old text book with the old medical aid rates of 720 & 440. I hav a question where I have to calculate the taxable value of medical aid. The question reads, The following tax rebates apply to medical fund contributions: R230 for sole member, R230 for first additional dependent, an additional R154 is allowed as a REBATE for each additional dependent other than the first dependant.
Question: G.Snel(49) has 4 dependants and his monthly contribution paid to medical aid is R3961. Calculate his taxable value of medical aid?
The old textbook refers to the deductions up until the 2012 year. For 2013 and beyond there is a new regime whereby a pure tax credit is given. So instead of there being a deduction before taxable income is calculated, the credit is given against the actual tax payable.
So to answer the question, which I must admit is ambiguous as the whole value would be taxable, just dependent on the regime.
1. So 2 x R230 x 12 3 *R154 x 12 = R11 064 would be allowed as a tax credit each year.
2. If the tax credits (230 230 154 154 154) in this case multiplied by 4 is greater than the monthly contribution then this difference would be allowed as a deduction provided this difference exceed the 7.5% threshold of the taxpayers taxable income.
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