Do we include the medical contributions on the tax return of a widowed pensioner whose late husband's employer pays the full medical contribution, as this will result in her receiving a refund or do we complete the contributions as Zero then she will rece
Important:
This answer is based on tax law for the tax year ending 28 February 2019.
Answer:
On the facts presented, we agree with your thinking. In terms of section 6A(3)(b) of the Income Tax Act, any contribution paid by an employer of the individual concerned, is deemed to have been paid by the individual, but only to the extent that the amount has been included in the income of the individual as a taxable benefit (Seventh Schedule). Where the contributions qualify for the nil-value, under paragraph 12A(5) of the Schedule, no amount is included and consequently no amount is deemed to have been paid by the employee (to the extent of the nil-value portion of the contribution). This must be reflected and the code 4493 must be used on the IT3 (or IRP5). So, in such a case it is only the contributions actually made by the employee that will qualify for the section 6A rebate and must be reflected in the ITR12.
Paragraph 12A(5) requires the employee (the husband) to have retired from the employ off the employer, the SABC, by reason of superannuation, ill-health or other infirmity. One may need to confirm this fact with the widow or the SABC.
If paragraph 12A(5) applies and based on the facts it is not Sanlam, but the SABC that must issue an IT3(a). It must then reflect the contributions and use the code 4493. We agree that the amounts should not be captured on the ITR12 if the nil value provision applies.