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Medical contribution as income and two different source codes for medical deductions? What does that

Posted 31 October 2013

My nephew works for family business. The business is paying his medical contribution and on his IRP5 under income received amount of R59 133 / source code 3810 appears. uUder deductions the same amount appears twice with 2 different codes namely 4005 and 4474. Why are there two different codes and what is reason for code 4474. Could you please explain this to me.

Second question: on a recent payslip "Medical aid tax credit applied -R646.00 appears" - could you please help with this - from where does it come, or what is reason for this credit?

TaxTim TaxTim says:
1 November 2013 at 9:48

Source code 4005 is the actual deduction, so the amount paid over to the medical scheme which reduces your after tax/deductions amount paid into your account. Source code 4474 is equivalent to the amount contributed by the employer and is a SARS code which will always match the 3810 Fringe Benefit. If you consider the cash component then you see the only real deduction is the one amount.

There is a credit offered against taxes payable for contributions to medical schemes which for the 2013 tax year was R230 per member for the first two members and thereafter R154 per member - both of these per month. I am not sure where the R646 comes from though.

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