Medical Aid is a big part of the budget of every South African Citizen.

Medical aid has certain tax benefits and can be structured in different ways for business owners.

Company payment
Depending on how you structure the income from your business, you can pay your medical aid contribution from your business account. In terms of a tax classification, this will be a fringe benefit that you will be taxed on. You will then be able to claim the tax credits as indicated below.

Own Payment
If you pay your medical aid from your own account, you will still be able to benefit from the tax credits below.

Medical aid tax deductions are divided into two parts. The first part is medical aid tax credits which is a fixed amount per month, per beneficiary on the medical aid. A further tax credit is then calculated based on your contribution and actual medical aid

In summary

The account from where the payment is made becomes irrelevant without proper tax planning. Small business owners are often in a position where they end up paying more tax than necessary due to a lack of proper tax planning and using tax planning tools to minimise their taxability to the benefit of the business and themselves.