BRIEF: Are you aware of the tax consequence of a Staff Loan (Soft loan) ?

Well the internal revenue Act 2015 (Act 896) has made it mandatory for employers who gives staff loan / company loans to their employees to charge tax on a deemed benefit on such loans, except where the follow rules / conditions applies

The term of the loan does not exceed 12 months

The aggregate amount of the loan and similar loan outstanding at any time during the previous months does not exceed three months of the employees basic salary.

The loan is from an employer to an employee.

 If the above conditions are NOT met, an amount is taxed in the hands of the employee as follows:

A quarter of the amount by which

a. if interest were payable under the loan at the statutory rate for the year of assessment, the interest that would have been paid by the payee during the of assessment in which the payment is made, exceeds

b. the interest paid by the payee during the year of assessment under the loan, if any.

Amount= ¼ X (BOG re-discount interest – any interest paid by the employee)

 This provision apply also to manager of an entity receiving such benefits. (A manager is defined under the act to include a Director, officer, member, partner or any other person who participates in making senior management decisions on behalf of an entity).

Author: Gloria Boye-Doku (ACCA,ICAG)

Tax Manager at Deloitte & Touche

 gboyedoku@Deloitte.com.gh