Medical Aid

SimplePay has a built-in item to accommodate the special reporting and tax requirements relating to medical aid.

Medical aid vs medical insurance

The Medical Aid system item is only for contributions to a registered medical scheme, and medical tax credits apply only to registered medical schemes.

Medical insurance (also called health insurance), such as gap cover, is not medical aid. It does not qualify for medical tax credits, so do not capture it with the Medical Aid system item – doing so would reduce the employee's PAYE incorrectly and report the wrong codes on their tax certificate. If you need help setting it up, contact Support.

To add medical aid to a payslip:

  1. Go to Employees, and select the relevant employee.
  2. Click Add next to Regular Inputs.
  3. Click Medical Aid under Deduction.
  4. Enter the Total amount per period. This is the total of the medical aid premium, including the employer and employee's contribution.
  5. Enter the amount that the employer contributes. This will result in a taxable fringe benefit for the employee.
  6. Indicate whether the employee handles the payment. If this option is not selected, the employee's portion of the premium (the total amount less the employer's contribution) will be deducted from their Net Pay.
  7. If your employee handles the payment, there will be an additional Don't apply tax credits box. If you don't tick this box, the employee should furnish the employer with proof of their medical aid contributions. This is to ensure that the reduction of the employee's PAYE by the medical aid tax credits is done only in legitimate cases. If you tick this box, the employee's PAYE on each payslip will not be reduced by the medical aid tax credits for the period. The tax credits will then be taken into account only on assessment. This may result in the employee receiving a tax refund, provided that the correct PAYE was paid throughout the year and they do not owe income tax for any other reason e.g. additional sources of income, travel allowances.
  8. If the employee does not handle the payment, there will be an option for you to select the Beneficiary to which the medical aid premium should be paid. To add a medical aid beneficiary, go to Settings > Beneficiaries, and click Add Beneficiary > Medical Aid. To edit an existing one, click Edit next to its name (under Medical Aid).
  9. Enter the number of members listed on the medical aid covered by the premium. Employees are entitled to a medical aid tax credit, which will reduce an employee's tax liability, based on the number of listed members on the medical aid.
  10. Click Save.

Third-party payments

Currently, third-party payments cannot be made directly from our system; however, you can view a list of such payments to be made by going to Pay Runs and clicking the PDF icon next to Beneficiaries.