Increase to official interest rate announced
The Rate of Interest for calculating the Fringe Benefit Value on an Employer provided
low or no interest loan has increased by 0.25% effective 1 December 2021
Where an Employer provides an Employee with a loan and either charge zero interest or a rate that is below the Official Rate of Interest, the difference between the two (ie the benefit to the Employee) must be treated as Taxable Fringe Benefit.
This Fringe Benefit should be processed via the payroll and reported on the Employees’ IRP5 against SARS Code 3801.
The Official Rate of Interest is defined in the Seventh Schedule as the rate of interest that is equal to the Repo Rate, plus 100 basis points (i.e. 1%).
The Repo Rate has Increased to 3.75% as of the 19th of November 2021, and the Official Rate of Interest, therefore, has increased to 4.75% effective 1st of December 2021, ie the first day of the month following the announcement.
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