South Africa: Increase in the 'official rate of interest' effective June 2023

South Africa: Increase in the 'official rate of interest' effective June 2023

The 'official rate of interest' is used to calculate the 'interest-free or low-interest fringe benefit'. The official rate of interest is defined in section 1 of the Income Tax Act as the repurchase rate (repo rate) plus 100 basis points (1%). A new official rate of interest is effective from the first day of the month following the date on which the new repurchase rate came into operation.

The repurchase rate (repo rate) has increased from 7.75% to 8.25% on 26 May 2023. As from June 2023 the 'interest-free or low-interest fringe benefit' should be calculated using the new 'official rate of interest', which is:

8.25% + 1% = 9.25%

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