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When completing a IRP5 do we deduct the medical tax credit from the paye before putting on the IRP5

Posted 29 October 2012 under Tax Q&A


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We are not sure whether you deduct the medical tax credit from the paye before filling in the paye on the IRP5 or do we put full paye in before medical tax credit

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TaxTim TaxTim says:
2 October 2012 at 9:22

If you are the employee, then you must not worry about the medical tax credit. Your employer will add that to the PAYE when deducting it and recording it on your payslip and then paying over the tax to SARS.

For the 2012 year there was no medical tax credit, but rather a deduction. You would enter the amounts as per the IRP5 exactly as is and then complete the medical aid section of the ITR12 income tax return. The deduction will then be based on that information. If your employer pays your medical aid, then any tax benefit will have been included in their calculation of PAYE.

If you are an employer then you must deduct the medical aid tax credits to the PAYE as per the tables and withhold those amounts and pay over to SARS.

Bev says:
2 October 2012 at 10:12

Hi Thanks for the e mail, i am enquiring about the 2013 tax year we are auditors and cannot get clarity as to whether on completing the IRP5 for the August 2012 run do we deduct the medical tax credit from the paye before putting it on the IRP5

TaxTim TaxTim says:
2 October 2012 at 10:43

It has been difficult to get a proper answer from SARS about this, but it would appear they are willing to accept that the medical credit should be deducted from the August PAYE reconciliation. For provisional taxpayers they released a note allowing taxpayers to include the MTC in the employee's tax paid row.

I know that SARS are working on an solution for the next period. I guess the correct answer would be if you have been deducting the MTC from the employee's PAYE each month then you would have to, if not then you must leave it out and let the taxpayer raise it on assessment.


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