In South Africa, the taxable benefit arising as a result of low interest or interest free loans is determined by para 11 of the Seventh Schedule. The value of the taxable benefit is the cash equivalent of the interest which would have been paid by an employee in respect of a debt, if such employee had been obliged to pay interest, less the amount of interest actually incurred by the employee.
For 2025, the rate at which interest-free or low interest loans are subject to income tax is set at 8.5% (8.75% in 2024). (Interest Rates – Table 3)
No value is placed on the taxable benefit in terms of para 11(4) if the debt owed by
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