The “official rate of interest” for calculating the taxable benefit on low-interest or interest-free loans has increased by 0.50% with effect from 01 June 2022.
Click here for the SARS official document.
RSA Interest Rate Change (Increased)
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 fringe benefits SARS Source Code 3801.
The “official rate of interest” is defined in Section 1(1) of the Income Tax Act 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 increased from 4.25% to 4.75% on the 20th of May 2022 and the Official Rate of Interest is therefore 5.75% effective from 01 June 2022
Impact of the RSA interest rate change on PaySpace
- The new interest rate has been implemented on the system effective 01 June 2022.
- Customers with the fringe benefit for loans have been recalculated.
- No other statutory changes have been announced.