Employee's receive a medical credit for valid medical expenses incurred outside the payroll.  These could include include medical aid contributions, medical aid shortfalls, doctor's visit expenses and other medical expenses supported by a dispensary note and receipt/s from the pharmacy (for prescription drugs), Medical Aid, Registered Clinic or Hospital.  Medical expenses should be processed within 3 months of the expense being incurred.  Employees are therefore required to submit medical expense claims in good time to have them processed, especially for transactions towards the end of the tax year.  The receipts should be retained for possible enquiry by ZIMRA auditors.

To claim the credit, the transaction needs to be processed into the payroll.  The amounts processed have an effect on the Net Paid only because of the impact they have on the PAYE computed.  They do not form part of income or expenses.

To process Medical Expenses

•Make sure that the Medical Credit percentage has been set up in the tax table.  For many years this has been set at 50%.  At this rate 50% of the medical expense is deducted from the PAYE calculated by the system.

•Setup the Medical Expenses Transaction Code

•Process the amount as normal using one of the processing methods, such as Payslip Input.  

•To check that the medical credit has been taken into account check the Tax Display.