Section RD 34 — Income Tax Act 2007: Employment-related loans: value using prescribed interest rates

RD 34 Employment-related loans: value using prescribed interest rates When this section applies (1) This section applies when an employer provides a benefit to their employee in an employment-related loan and the employer does not choose to determine the value of the benefit under section RD 35 . Amount of interest or amount under financial arrangement (2) The value of the benefit in a period is the amount by which the prescribed interest on the loan is more than— (a) the amount of interest that accrued on the loan in the period; or (b) when the loan is a financial arrangement and it is appropriate for the nature of the loan, the income that would have accrued to the employer’s benefit in the period as calculated under the yield to maturity method. Meaning of prescribed interest (3) For the purposes of this section, prescribed interest means,— (a) except as provided in paragraph (b), the amount of interest that would have accrued on the loan during the quarter or tax year had the interest been calculated on the daily balance of that loan at the prescribed rate of interest: (b) for loans made on or before 31 March 1985, the interest on which is not subject to review, the amount of interest that would have accrued on the loan during the quarter or tax year had the interest been calculated on the daily balance of the loan at the non-concessionary rate of interest for— (i) the tax year in which the agreement to make the loan was signed; or (ii) if the agreement was not in writing, the year in which the loan was agreed to by all parties. Defined in this Act: amount , employee , employer , employment-related loan , financial arrangement , income , interest , non-concessionary rate of interest , prescribed interest , quarter , tax year , Compare: 2004 No 35 ss ND 1D, ND 1G