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What is a reasonable market related interest rate to use on a loan to a family trust?

Posted 8 August 2014 under Tax Q&A


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Hi Tim, what is regarded as a reasonable interest rate on a loan made by a trustee to a family (discretionary) trust in order to avoid a "Deemed donation" being made in the form of no/too low interest? I would argue that it would be an "opportunity cost" rate - for example a FNB money market rate.

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TaxTim TaxTim says:
8 August 2014 at 15:36

SARS have official interest rates you can use, or else you can use Prime -1 is often accepted.


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