HomeHome SearchSearch MenuMenu Our productsOur products

Here's how to give your employee's relatives a tax-free loan

by , 14 August 2014
If you give your employee a loan and don't ask them to pay it back, your employee will pay fringe benefit tax on that money. But what you may not know is you can give your employee's relatives a loan tax-free.

Sure, normally any benefits you give your employee's relatives will result in tax, but there are situations where you can give his relatives a loan and it won't cost your employee anything.

Just ensure you do the following or that loan won't qualify for this benefit...

 

You can give your employee's relative a tax-free loan if you do the following

 
1. If you charge interest at the official interest rate. 
 
The interest is deductable for your company. 
 
And the relative can take advantage of on interest exemption of up to a maximum of R22 800 (for people under the age of 65) and R33 000 (for people over 65). This means the relative will only have to pay tax on any interest that exceeds this amount.
 
*********** Best seller  *************
 
Stop forking over thousands of unnecessary cash to SARS!
 
Be one of the first in the country to get access to the information that'll make sure you pay the least tax possible...
 
You can legally save your company thousands of rands in taxes on forgotten fringe benefits.
 
 
*********************************
 
2. If the relative repays the loan the debit loan account won't show this as a dividend. But you can only do this once for the duration of the company-shareholder relationship. That means if he takes a second or subsequent loan from the company, it'll be a dividend even if he repays the loan.
 
Remember, though if you don't ask your employee or his relative to pay back the loan, your employee will have to pay tax on it. 
 
So before you go hand out loans to your employee, or his relatives, ask him if he minds paying the extra tax
 


Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>