It is important to remember that interest and penalties paid to SARS are not deductible for income tax purposes. On the other hand, interest received from SARS is fully taxable (after deducting the current initial exemption of R23 800 per annum (R34 500 if you are 65 or older) for all local interest income earned by natural persons).
Income Tax, Provisional Tax, Dividends Tax, etc
Payable to SARS on short payments of all such taxes (other than VAT): 10.25% per annum from 1 March 2019 (was 10% per annum with effect from 1 July 2018).
Payable by SARS on refunds of tax (where interest is applicable): 6.25% per annum from 1 March 2019 (was 6% per annum with effect from 1 July 2018).
If the refund is made after a successful tax appeal or where the appeal is conceded by SARS, the interest rate is 10.25% per annum from 1 March 2019 (was 10% per annum from 1 July 2018).
VAT
Payable to SARS on late payments: 10.25% per annum from 1 March 2019 (was 10% p.a. from 1 July 2018).
Payable by SARS on VAT refunds after prescribed period: 10.25% per annum from 1 March 2019 (was 10% from 1 July 2018).
Fringe Benefits
Official interest rate for loans to employees below which a deemed fringe benefit arises: 7.75% per annum from 1 December 2018 (was 7.5% per annum from 1 April 2018). See below for details.
Dividends Tax
Official interest rate for loans (designated in Rands) to shareholders below which the interest on such loans can be deemed to be dividends on which Dividends Tax is payable: 7.75% per annum from 1 December 2018 (was 7.75% per annum from 1 April 2018). See below for details.
Donations Tax
Loans to Trusts by natural connected persons with interest charged at rates below the official rate create a donation subject to donations tax at 20%. Contact us for more details.
Penalties
The amount of penalties for late payments (where applicable) are substantial (at least 10%) and are in addition to interest charged.
Fringe Benefits, Loans, Donations Tax and Dividends Tax - Interest Rates.
The “official” rate of interest over the past 5 years
With effect from 1 February 2014 - 6.5% p.a.
With effect from 1 August 2014 - 6.75% p.a.
With effect from 1 August 2015 - 7.0% p.a.
With effect from 1 December 2015 - 7.25% p.a.
With effect from 1 February 2016 - 7.75% p.a.
With effect from 1 April 2016 - 8.0% p.a.
With effect from 1 August 2017 - 7.75% p.a.
With effect from 1 April 2018 - 7.5% p.a.
With effect from 1 December 2018 - 7.75% p.a.