I have a member loan account of approx R1m rand. I wish to reduce this by R100k by transferring this money to my personal bank account. The members loan account is interest free. What are the tax implications for my company and my personal tax? and how should I declare it on my tax returns.
There would be no tax effect if you reducing the members loan and paying it back to yourself. You would just need to declare the members loan balance in the assets and liabilities section of your personal tax return and also on the balance sheet of your company.
However, It would be tax efficient to record a market related interest on the loan. Then you can claim the tax deduction in your company and record the interest income in your personal tax return (the first R23,800 of interest per year for an individual is tax exempt).
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