Please help - Tax Question

[Nocturnity]

Seems no one reads the tax thread so I'll post it here...

I have a tax question...

My IRP5 says the following:

Code: 4486
Description: Med. Aid Capped Amount
Amount: R5830

That amount shouldn't really appear as my remunerations is supposed to be a set amount with no deductions. I assume the fact that it's there means that I was not taxed on that amount throughout the year. That's fine. Now for the question.

I pay my own medical aid fees and get a statement from Old Mutual at the end of the year. The amount I paid was higher than R5830. When completing my tax return online, do I change the R5830 to the full amount, do I add an additional line for the difference or is R5830 the maximum I can claim on?

Thanks!

 

[Barefoot Billionaire]

Hi, every year the tax-deductibe capped med aid contribution is adjusted. For the 2008/09 year you can only deduct R530 pm for yourself (and R1 060 for yourself and one dependant).
R5830 sounds right for the 2007/08 year, for which we're filing now.

I always put the full amount that i paid for the year and leave it to SARS to calculate the capped amount.

 

[CathJ]

Surely if you pay your own fees, it shouldn't be on your IRP5?

 

[Nocturnity]

Thanks Barefoot Billionaire!

Surely if you pay your own fees, it shouldn't be on your IRP5?

Aye! That's what I said too! However, it does appear on my IRP and our finance lady seems a bit clueless when I asked her about it.

 

[CathJ]

Thanks Barefoot Billionaire!



Aye! That's what I said too! However, it does appear on my IRP and our finance lady seems a bit clueless when I asked her about it.

It's worrying how many "finance lady"-type people (male or female) are clueless about these things. I think that often it's mission creep - it wasn't their job, then it became their job, and they are never actually trained on what to do, or what the law says.

 

[hxc87x]

Barefoot Billionaire is right.

There is also an additional deduction available after that which involves a little calculation...

[total medical aid contributions made by tax payer - total deduction allowed (R5830)] + [medical aid contributions made by employer and taxable as a fringe benefit] + [other qualifying medical costs] - ([7.5%]x[taxable income - retirement fund lump sum benefits received on or after 1 Oct 2007])

If the above calculation results in a positive amount then you have that amount as an additional deduction. A negative means no additional deduction.

 

[dd1313]

Barefoot Billionaire is right.

There is also an additional deduction available after that which involves a little calculation...

[total medical aid contributions made by tax payer - total deduction allowed (R5830)] + [medical aid contributions made by employer and taxable as a fringe benefit] + [other qualifying medical costs] - ([7.5%]x[taxable income - retirement fund lump sum benefits received on or after 1 Oct 2007])

If the above calculation results in a positive amount then you have that amount as an additional deduction. A negative means no additional deduction.

Hi Guys

Where can I get the docs that talk about this,..

THanks
DD

 

[hxc87x]

Hi Guys

Where can I get the docs that talk about this,..

THanks
DD

No idea, I only know this because I'm writing my tax exam tomorrow and I've got my textbook in front of me...

If I'm not mistaken then you should be able to find information on employees tax and provisional tax payments in the Fourth Schedule, with fringe benefits being covered in the Income Tax Act (probably under the Gross Income definition) and the Seventh Schedule.

 

[Barefoot Billionaire]

Hi Guys

Where can I get the docs that talk about this,..

THanks
DD

I bought 'Paying less tax made simple 2008' by Ralf Metz. The book's structure leaves room for improvement, but generally the author explains tax stuff for individuals really well. The detail on medical aid deductions is on pages 233-237. You should be able to find the book at any CNA or Exclusive Books.

 

[guest2013-1]

FYI, there are 3 ways medical aid contributions work

1) You pay for it yourself monthly out of your own pocket (your own medical aid)
2) You have company medical aid, half of which you pay, the other half the company pays (or in some instances, the company pays in full)
3) You pay for it yourself, but the company contributes to medical aid and makes it part of your salary.

I had option 3 where I'd pay for my own medical aid and the company only have me x amount extra on my salary. It does mean you get a slight tax break monthly but i don't think it was much.

My boss used to pay the maximum amount of tax he could based on my salary and the car allowance/cellphone allowance/internet allowance and medical aid I had as part of my benefits and each year I got back around R3k-5k

I usually donate my tax return money to a children's home. I should've been more selfish and push that back into debt.... bah