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IT3Bs and interest on loan account of a director

03 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Is a company that pays interest on a loan account of a director, obliged to submit a third party return? 

Q: If a private company pays a director interest on his loan account, does that company have to issue a document of some sort like an IT3B?

A: The obligation to submit third party returns (IT3(b)) is now regulated in terms of section 26 of the  Tax Administration Act(TAA) and not by section 69 of the Income Tax Act(ITA). Unlike section 69 of ITA, Section 26 of the TAA only requires submission of such return if such required is imposed by public notice (GG36346 14 Jun 13). Currently, in our view, this notice only imposes such reporting obligation on a private company if that company is a "financial institution” as defined in the notice or is a connected person to a JSE listed company. 

Please click here to access the notice. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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