SARS Updated Interest Rates for Table 3.

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SARS has released the latest update to Table 3 – the official interest rates used to calculate taxable fringe benefits on interest-free or low-interest loans. These rates apply mainly to employee loans and certain connected-person loans where the interest charged is below SARS’ “official rate”.

The December 2025 update introduces a new official interest rate of 7.75%, effective 1 December 2025, and applicable until the Repo rate changes.

This adjustment reflects the rule that the official rate is always Repo + 1%.
As shown on page 3 of the SARS document, the rate drops from:

• 8.00% (1 Sept – 30 Nov 2025)
  to

• 7.75% (from 1 Dec 2025).

What is Table 3?

Table 3 shows the official rate of interest as defined in section 1(1) of the Income Tax Act. This is the rate SARS uses to determine whether a taxable fringe benefit arises when:

• an employee receives a loan from an employer (or through an arrangement with the employer), and

• the loan has no interest or below-market interest.

If the interest charged is less than the official rate, the difference must be taxed as a fringe benefit.

The table provides a month-by-month record of the official rate going back to 1985, ensuring accurate calculations even for historical audits or payroll corrections.

When Should Accountants Use Table 3?

Accountants must use Table 3 when:

1. Calculating Fringe Benefits for Employee Loans

   If a company gives an employee a loan (e.g., housing loans, study loans, emergency loans), and the interest rate is below the official rate, Table 3 determines the taxable benefit.

2. Reviewing Payroll Compliance

   Payroll teams must apply the correct official rate for each month to avoid under- or over-taxing staff.

3. Preparing or Auditing Employer Reconciliations (EMP501)

   Historical rates matter for retrospective corrections or audits.

4. Related-Party or Connected-Person Loan Assessments

   Although Table 3 mainly applies to employee loans, understanding SARS’ official rate helps when assessing other below-market loans, especially where transfer pricing or Section 7C considerations arise.

5. Tax Planning and Year-End Calculations

   Any interest-free or low-interest loan given during the tax year must be tested against the rates in Table 3.