I have a client that has a shareholder loan account in the company of about R600,000 owing to the company by the sole shareholder.
The shareholder will not be able to afford the PAYE on this if we convert this whole amount to salaries paid.
As far as I understand, the other option is to convert this to an interest bearing loan account.
- What are the requirements to do this?
- What is the interest rate that needs to be charged?
- Does he need to have paid the loan back monthly to have qualified for this?
- Anything else we need to consider or any other options?
Thank you so much in advance.