Did you Know that loans advanced to company directors, employees or relative of directors at an interest rate lower than the prescribed market interest rate constitute a benefit chargeable to tax? The tax chargeable on such loans is referred to as Fringe benefit tax (FBT) and is computed at 30% on the value of the taxable benefit.
The taxable value of the benefit is the difference between the actual interest charged and the Commissioner’s prescribed rates published on a quarterly basis.
FBT is due and payable on or before 9th of the following month and is paid together with Pay as You Earn (PAYE).
For any further clarification on FBT compliance or assistance on any other payroll issues, kindly contact our Payroll Team. Feel free to contact us via email@example.com for any clarifications and advice.