Apr 2020 | Official Rate of Interest Change
The “official rate of interest” for calculating fringe benefits has decreased with 1.00% with effect 01 April 2020.
Click here for the Official SARS Document.
Interest Rate Change
Where a loan is obtained by an employee from his employer and either no interest is payable or the interest payable is less than the “official rate of interest”, the difference between the amounts calculated at the official rate of interest, and the amount calculated at the interest rate applied by the employer, is a taxable fringe benefit. The fringe benefit value must be processed in the payroll and reported on the tax certificate against the general SARS Tax Code 3801. Effective from 1 March 2011, the “official rate of interest” is defined in the Seventh Schedule as the rate of interest that is equal to the RSA repurchase rate (“Repo rate”) plus 100 basis points (1%). The official rate of interest changes from the first day of the month following the date on which the Repo rate change comes into effect. The Repo rate was reduced to 5.25% on 19 March 2020 and the Official Rate of Interest is therefore 6.25% effective from 1 April 2020.
System Impact
- The new Interest Rate has been implemented on the system effective 01April 2020