11. BENEFITS IN RESPECT OF INTEREST ON DEBT
[Heading of paragraph 11 substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]
(1) The cash equivalent of the value of the taxable benefit derived in consequence of the debt owed by an employee in the circumstances contemplated in paragraph 2(f) shall be the amount of interest that would have been payable on the amount owing in respect of the debt in respect of the year of assessment if the employee had been obliged to pay interest on such amount during such year at the official rate of interest, less the amount of interest (if any) actually incurred by the employee in respect of the debt in respect of such year.
[Subparagraph (1) amended by section 33 of Act 96 of 1985 and substituted by section 48 of Act 21 of 1995 and section 98 of Act 25 of 2015 effective on 8 January 2016]
(2) For the purposes of this Act –
(a) a portion of the said cash equivalent shall be deemed to have accrued to the employee –
(i) where interest in respect of the debt in question becomes payable by the employee at regular intervals, on each date during the year of assessment on which interest becomes so payable for a portion of such year;
[Item (i) substituted by section 98 of Act 25 of 2015 effecive on 8 January 2016]
(ii) where interest in respect of the debt in question becomes payable by the employee at irregular intervals or where interest on the loan is not payable by him or her, on the last day of each period during the year of assessment in respect of which any cash remuneration becomes payable by the employer to the employee; and
[Item (ii) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]
(b) the said portion shall be determined by calculating interest at the official rate of interest for the portion of the year referred to in subparagraph (2)(a)(i) or the period referred to in subparagraph (2)(a)(ii), as the case may be, and deducting therefrom so much of the amount of interest (if any) payable by him or her on the debt as relates to the said portion of a year or the said period, as the case may be : Provided that where the official rate of interest has been altered with effect from any date, any cash equivalent which is under item (a) deemed to have accrued to the employee on any date falling before the date on which such interest rate was so altered shall be determined as though such rate of interest had not been so altered.
[Words preceding the proviso substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]
(3) A different method of calculation of the said cash equivalent or portions thereof may be employed if the Commissioner decides, on application by the taxpayer, that such method achieves substantially the same result as the methods provided in subparagraphs (1) and (2).
[Subparagraph (3) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]
(4) No value shall be placed under this paragraph on the taxable benefit derived in consequence of –
(a) a debt owed by any employee to his or her employer if such debt or the aggregate of such debts does not exceed the sum of R3 000 at any relevant time; or
[Item (a) amended by section 2 of Act 8 of 2007 and section 1 of Act 3 of 2008 and substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]
(b) the debt owed to any employer by an employee incurred for the purpose of enabling that employee to further his or her own studies;
[Item (b) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016 and amended by section 70 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]
(c) a debt owed to his or her employer in consequence of a loan by that employer to that employee as does not exceed the amount of R450 000 if-
(i) the debt was assumed for the purposes of acquiring immovable property used for residential purposes by the employee;
[Sub-item (i) substituted by section 44 of Act 23 of 2020]
(ii) the market value of the immovable property acquired does not exceed R450 000 in relation to the year of assessment during which the property is acquired;
(iii) the remuneration proxy of the employee does not exceed R250 000 in relation to the year of assessment during which the loan is granted; and
(iv) the employee is not a connected person in relation to the employer.
[Paragraph (c) added by section 70 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date]
(5) Where any amount, being the cash equivalent as determined under the provisions of this paragraph, of the value of a taxable benefit derived by any taxpayer in consequence of a debt owed by him or her, has been included in such taxpayer’s taxable income in any year of assessment, such amount shall for the purposes of section 11(a) of this Act be deemed to be interest actually incurred by him or her in that year of assessment in respect of the said debt where such amount, had it been actually incurred as interest, would have been incurred by the taxpayer in the production of his or her income.
[Subparagraph (5) substituted by section 98 of Act 25 of 2015 effective on 8 January 2016]