Originally Posted by
antonnkramer
So if the company pays an employee cash and allocates it to the loan account and not to salaries, it must charge interest on the loan at the prescibed rate. When is the loan ever deemed to be a dividend by SARS and the company will have to pay over the 15%? so can the loan stay there for many years as long as interest is being charged on it?
So the cash flows are the company pays over the net amount to the employee's loan account, doesnt have to then pay PAYE over that month, charges interest and one fine day a few years later, the company can declare a dividend to zero the loan. It will pay higher tax at year end as it doesnt get the PAYE portion deducted off income, but atleast it helps out on the cash flow situation if the company is tight.
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