Interest Rates

A taxable benefit (fringe benefit) arises if an employee incurs a debt in favour of the employer, any other person by arrangement with the employer, or an associated institution in relation to the employer, if no interest is payable or if the interest payable is less than the “official rate of interest”. The difference between the amount which would have been payable if the debt had incurred interest at the official rate, and the interest actually paid by the employee, is taxed as a fringe benefit.

The term “official rate of interest” is defined in section 1(1) of the Income Tax Act 58 of 1962 (the Act) and 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.

As the South African Reserve Bank changed the “repo rate” on 24 March 2022, the official rate, as shown in Table 3, was updated with effect from 1 April 2022 until the next change in the “repo rate”.

Find a copy of Table 3 here.

 04/04/2022