South Africa | Decrease in the Official Rate of Interest Effective October 2024
Where 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 rate is considered a taxable fringe benefit.
This fringe benefit must be processed in payroll and reported on the tax certificate under the general fringe benefits IRP5 code 3801.
The official rate of interest is defined in section 1(1) of the Income Tax Act as the
RSA repurchase rate (repo rate) plus 100 basis points (1%). The official rate of interest is updated from the first day of the month following a change in the repo rate.
Since the
repo rate decreased from 8.25% to 8.00% on 20 September 2024, the official rate of interest will be 9.00%, effective from 1 October 2024.