SARS Updated Table of Interest Rates: Table 3 – Rates at which interest-free or low interest loans are subject to income tax (May 2020)

SARS Updated Table of Interest Rates: Table 3 – Rates at which interest-free or low interest loans are subject to income tax (May 2020)

• 04 May 2020
• Tax Administration
• SARS

The term “official rate of interest” is defined in section 1(1) of the Income Tax Act 58 of 1962 (the Act). Where a loan is obtained by an employee from his or her employer in terms of which no interest is payable or where the interest payable is less than the “official rate of interest”, the difference between the amount which would have been payable if the loan was granted at the official rate and the amount actually paid by the employee, is taxed as a fringe benefit.

The official rate of interest is reduced from 6.25% to 5.25% from 1 May 2020 until a further change in the Repo rate is announced.

This article first appeared on sars.gov.za.

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