It is therefore apparent from a simple reading of that amendment that the law requires the competent minister to publish in the Official Gazette the amendments to the penalty, but that the change in the prescribed statutory rate is not subject to compliance by the Minister with that requirement. The amendment is automatic within the meaning of paragraph 1(2)(c) of the Act. The most recent relevant changes in the interest rate as of the date of this publication are as follows: 2(a) For the purposes of paragraph 1, the interest rate shall be the redemption rate fixed from time to time by the Reserve Bank of South Africa, plus 3.5 per cent per annum. In Davehill (Pty) Ltd v Community Development 1988(1) SA 290(A), it was held that the prescribed rate of interest is fixed at that time and remains constant, although the Minister may charge different interest rates from time to time. Accordingly, with effect from 8. In January 2016, the prescribed interest rate was linked to the repo rate. The wording of paragraph 1(2)(c) is clearly mandatory. Interest rate on loan amountsupdated on September 13, 2022 It is important to note that the prescribed interest rate is not a variable rate in the sense that it must vary pre-existing Mora Matters interest rates from time to time if the interest rate fluctuates. If the Reserve Bank changes the repo rate, a new prescribed interest rate takes effect on the first day of the second month following the month in which the new repo rate is announced. The interest rate applicable for each debt is the interest rate applicable to the payment on the due date or on the date of the request for payment if there is no fixed maturity date.
This interest rate applies even if the prescribed interest rate changes at a later date. Where interest is due on a debt and the rate of interest at which interest is to be calculated is not governed by any other law, agreement, trade practice or otherwise, such interest shall be calculated at the rate laid down in point (a) of paragraph 2 on the date on which such interest commences, unless: a court orders otherwise because of special circumstances relating to that debt. On 29 July 2022, the Minister of Justice and Penitentiary Institutions published in Official Gazette No. 47133, Opinion 2376 (“the most recent opinion”), an interest rate of 7.75% per annum as of 1 May 2022 and withdrew Government Opinion R1067 of 2020, the last such communication from the Minister`s Office (“the last opinion”) dated 9 October 2020, which indicated a revised interest rate of 7.25% per annum with effect from 1 October 2020. July 2020. Home > > General The prescribed interest rate is 7.25% from 1. January 2022 (c) the interest rate provided for in point (b) shall apply from the first day of the second month following that in which the redemption rate is set by the Reserve Bank of South Africa. (emphasis added) The latest announcement is correct with respect to the interest rate applicable from May 1, 2022, but since October 9, 2020, the Minister has not announced any change in the repo rate in the latest communication. The repo rate has undergone no less than four other changes since July 2020. These have been neglected. The prescribed interest rates that came into effect on the first day of the second month following each announcement of a change in the reverse repo rate since January 8, 2016 are as follows (adjusted by 3.5% and calculated on or after the first day of the second month following the applicable repo rate change): With effect from 8.
In January 2016, an amendment to the Law on Prescribed Interest Rates was regulated by law to ensure that the prescribed interest rate is automatically linked to the repo rate of 3.5% above the aforementioned interest rate, which takes effect 2 months after the adjustment of the repo rate and is published by the Ministry of Justice and Correctional Service in the Official Gazette. The prescribed interest rate appeared to be locked at 15.5% per annum for an extended period of time, despite fluctuations in SA Reverse Banks` redemption rate (commonly referred to as the reverse repo rate), the rate that had previously affected changes in the prescribed rate. This rate of 15.5% per year applied between October 1, 1993 and July 31, 2014. Accordingly, and on the basis of a clear interpretation of the amended law, against which no legal challenge has been raised and to which the general principles of legal interpretation apply, the currently prescribed interest rate, as of 1 September 2022, is 9% per annum and may change on the first day of the second month following any announcement of a change in the repo rate. Mora interest is a pervasive principle in legal matters, but also in the lives of many people in South Africa. South Africa`s debt crisis continues to worsen, and a clear understanding of how and when interest is charged on this debt is crucial for creditors and debtors alike. Until the introduction of the Judicial Matters (Amendment) Act 2015 (“the amendment”), which was introduced on 8 May. In January 2016, the prescribed interest rate was set in accordance with the Prescribed Interest Rate Act, 55 of 1975 (“the Act”). For the period from 1993 to July 31, 2014, this rate was 15.5% per year and increased to 9% from August 1, 2016 until the amendment came into force. Although the overall interest rate at which Mora interest is calculated may change from time to time, the interest rate at which Mora interest is calculated on a certain outstanding amount may not do so.
This means that Mora interest on an unpaid amount remains at the percentage applicable at the time the amount is due. Even if the Mora interest rate is subsequently changed, the interest rate applicable to that particular outstanding amount will not apply. However, it should be noted that mora interest can only accrue after a debtor has been placed in mora for a period of 30 days. This means that the creditor must have claimed the unpaid payment from the creditor. If, after 30 days from the date of service of this claim, the debtor has still not paid the outstanding amount, the Mora interest rate in force at that time will begin to run. This is particularly relevant given how often the mora interest rate has changed in 2020 and should be taken into account by collectors and creditors. The rates in effect from 1993 to present are listed below for reference. Moreover, our understanding of the facts is that the interest rate cited in the Minister`s last communication is indeed incorrect and does not correspond to the repo rate in effect at that time (which was 4.5% – the rate in the last notice should have been 8%). In addition, the Minister did not release the four interim changes to the repo rate until the last announcement.
The image reproduced in the gazettes is both false and incomplete. Due to the position of the mora interest as the representative of the damage, the rate at which it is calculated cannot be fixed by agreement. The interest rate at which Mora interest may be calculated may be set by the Minister of Justice only as a percentage higher than the repo rate prescribed by the Reserve Bank. This rate remained at 15,5 % per annum from 1 October 1993 until 1 August 2014, when it was reduced to 9 % per annum. On March 1, 2016, it rose to 10.25% and hovered around this amount for the next four years. However, the prescribed rate has recently undergone various changes due to the COVID-19 pandemic, resulting in unprecedented financial hardship. The rate was reduced five times during 2020 to ease the financial burden across the country. The following is a table showing the evolution of the prescribed interest rate since 1993: Interest rates at which interest-free or low-interest loans are subject to income taxUpdated on September 26, 2022 The prescribed interest rate was then reduced to 9% effective August 1, 2014. * The Reserve Bank of South Africa changed the “repo rate” effective September 22, 2022 with effect from October 1, 2022. Mora interest accrues when payment is due and the interest rate has not been agreed between the parties.
For a creditor to be entitled to this interest, there must be a request for payment or a due date for payment. The creditor is then entitled to charge interest from the date prescribed by the Prescribed Interest Rate Act. (b) The member of the Cabinet responsible for the administration of justice shall publish, whenever the Reserve Bank of South Africa adjusts the redemption rate, the revised interest rate provided for in paragraph (a) by means of a notice in the Official Gazette. “[Interest on a debt shall be calculated at the prescribed rate] The interest rates at which interest on the debt is calculated in certain circumstances are not: Under the Law on Prescribed Interest Rates, interest on debts for which no interest rate is prescribed is calculated at the repo rate plus 3.5%.