The “official rate of interest” for calculating the taxable benefit on low-interest or interest-free debt in South Africa, will decrease by 0.25% with effect from 01 December 2024.
For more information, click here to view the current market rates on the Reserve Bank website.
Official Rate of Interest Decrease
According to paragraphs 2(f) and 11 of the Seventh Schedule to the Income Tax Act, when an employee incurs debt to their employer, and either no interest is payable or the interest rate is lower than the official rate of interest, the difference between the amount calculated at the official rate and the amount calculated at the employer’s interest rate (if any) is treated as a taxable fringe benefit.
This fringe benefit must be processed in payroll and reported on the tax certificate under the general fringe benefit IRP5 code 3801 (general fringe benefits).
The official rate of interest as defined in section 1(1) of the Income Tax Act, is the South African repurchase rate (repo rate) plus 100 basis points (1%). Updates to the official rate of interest apply from the first day of the month following any change in the repo rate.
Following the repo rate decrease from 8.00% to 7.75% on 22 November 2024, the official rate of interest will adjust to 8.75%, effective 01 December 2024.
Should you have any questions regarding the South Africa Official Rate of Interest Change , please feel free to visit our Support page for more ways to get in touch, or email us at [email protected]
The PaySpace Team
