Updated Table of interest rates: Table 3 – Rates at which interest-free or low interest loans are subject to income tax

Updated Table of interest rates: Table 3 – Rates at which interest-free or low interest loans are subject to income tax

• 27 January 2020
• Interest
• SARS

Important:

This article is based on tax law for the tax year ending 28 February 2020.

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.

* Repurchase rate as announced by the Reserve Bank

Note: The “official rate” as defined in section 1(1) of the Act is linked to the repurchase rate plus one per cent. The official rate is adjusted at the beginning of the month following the month during which the Reserve Bank changes the repurchase rate.

This article first appeared on sars.gov.za.

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