Interest accrued on any medical scheme savings account is taxable in the hands of the member in the same way as any other interest earnings.
The taxman has told the Council for Medical Schemes that medical schemes' trustees must report all interest paid by a scheme to its members' savings accounts.
The South African Revenue Services has ruled that personal medical savings accounts are generally owned by members and not by the schemes themselves.
It follows that any interest paid by the fund to a personal medical savings account accrues to the account-holder or owner, being the member.
Exemptions given to medical schemes on interest earnings do not apply to individual members.
Esann de Kock, communications manager at the council, says members should remember the following regulations on personal medical scheme savings accounts:
* Schemes may not pay an amount of more than three months' worth of a member's total contribution to a medical scheme during a financial year into the member's savings account. In other words, your contributions to a savings account are limited to 25 percent of your annual contributions;
* Funds deposited in a member's personal savings account may not be used to offset future contributions;
* Credit balances in a member's personal medical savings account should be transferred to another medical scheme with a personal medical savings account option when a member changes schemes; and
* You can only take the cash when your membership of a scheme ends and you do not move to another scheme, or you move to a scheme that does not have a savings option.