Loan issued: postings, interest accrual

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

The ability to issue loans is not the prerogative of only credit institutions. This can be done by any organization with sufficient financial resources. Loans are often issued to employees in order to encourage them for successful work and motivate qualified specialists for further cooperation. The ability to borrow at a low interest rate and ask for a convenient repayment period makes a loan from an employer attractive to an employee.

How to draw up a loan agreement

The relationship between the employer and the employee receiving the money on loan is formalized by a loan agreement. It spells out the essential conditions:

• The amount given to the borrower.
• Purposes for which the loan is taken.
• Loan interest, how it is calculated.
• Procedure for paying interest and repaying a loan: in cashto the cash desk of the organization or withholding part of the salary based on a personal application.
• The method of issuing funds to the borrower under the agreement: in cash from the cash desk or by transfer to a bank account.
• Possibility of early repayment.
• Other conditions.

On the basis of the law 173-FZ, only credit organizations have the right to issue loans and credits in the currency of another state. At the place of work, an employee can receive a loan only in rubles. In the event that the interest rate is not specified in the agreement, on the basis of Article 809 of the Civil Code of the Russian Federation, by default, it is taken equal to the refinancing rate. If an employee is given an interest-free loan, this must be indicated in the contract.

Reflecting transactions for the issuance of loans in accounting

For issued loans, accounting entries will depend on the terms of the contracts on the basis of which the loans were issued. Postings can be made to account 58 or 73. Account 58 takes into account financial investments. One of the conditions for classifying the amount as a financial investment is the possibility of obtaining future income. It is clear that an interest-free loan on this account cannot be taken into account. Therefore, there are two options for reflecting this operation:

Loans issued to employees. Postings on the account "Financial investments"

Debit	Credit	Note
58	50	Cash paid out from cash register
58	51	Money transferred to the current account

2. Interest-free loans issued. Postings on the account "Settlements on granted loans".

Debit	Credit	Note
73.1	50	Cash paid out from cash register
73.1	51	Money transferred to the current account

How to calculate interest on a loan

According to Article 807 of the Civil Code of the Russian Federation, the day the loan agreement comes into force will be the day the cash is issued from the cash desk or the loan amount is transferred by payment order to the employee's settlement account.

Based on Article 191 of the Civil Code of the Russian Federation, the period for using the money received on credit begins on the day after the entry into force of the contract. On the last date of each calendar month in which a loan is issued, the interest accrual entries on the loan issued to the employee are reflected in the accounting statement.

Debit	Credit	Note
58	91	Loan interest charged to other income

As to when the accrual of interest on a loan ends, there is no consensus among lawyers and accountants. The problem is whether to charge interest per day, inin which full repayment occurred: the borrower paid the last part of the debt to the cashier or a deduction was made on wages for the entire amount of the balance. There are no specific instructions in the legislation on this matter. In order to avoid questions and disagreements, it is better to indicate this moment in the loan agreement.

How to record loan repayment and interest payments

The deposit of money into the cash desk of the organization or their transfer to its current account must be made within the established time limits by the employee to whom the loan was issued. Postings are made on the credit of the accounts on which the accrual was made.

Debit	Credit	Note
58	50	Money has been deposited into the cashier
58	51	Money transferred to the current account
58	70	Part of salary withheld to repay loan and interest
73.1	50	Reimbursement for an interest-free loan has been paid to the cashier
73.1	51	Money transferred to the current account repayment of an interest-free loan
73.1	70	Part of salary withheld to reimburse interest-free loan.

There is an opinion that it is impossible to deduct debts on loans and interest from wages. It is based on article 137 of the Labor Code, which lists all types of possible deductions. The list is closed. Other federal laws provide some additional justification for certain payroll deductions, but no repayment of loans is mentioned anywhere. The issue is debatable, perhaps the State Labor Inspectorate will find violations in such withholding. If, nevertheless, the organization decided to pay off the debt by withholding part of the salary, it is necessary to include this in the contract and take a statement of consent from the employee.

Features of issuing a loan to the founder of an organization

Theoretically, issuing a loan to the founder differs in that he is not an employee. Therefore, to issue an interest-free loan, a set of settlements is used not with personnel, but with other debtors. If a loan is issued to the founder, the entries will look like this:

Debit	Credit	Note
76	50	Cash paid out from cash register
76	51	Money transferred to the current account

In practice, issuing a loan to the founder is a way to withdraw your money from the organization. Until 2016, loans were issued to the founders interest-free and practically irrevocable, agreements on themextended again and again, it had no consequences.

What is the material benefit of the borrower from savings on interest

In connection with the issuance of loans without interest or at a very low rate, the concept of the borrower's material benefit arises due to savings on interest payments. According to the definition of the Tax Code, the borrower receives material benefits if the interest on his loan is less than 2/3 of the Central Bank's refinancing rate. Today it is 7.75%, and 2/3 of it is 5.16%. If the borrower took out a loan below this rate, for example, at 3% per annum, then the difference between 5.16% and 3% will be considered a material benefit. An employee who receives an interest-free loan will benefit from 5.16% per annum. She is subject to income tax at a rate of 35%.

Before 2016, material benefits were calculated at the time of redemption. On the day when the employee returned the last part of the money and fully fulfilled his obligations, the accountant had to calculate how much interest he would pay, based on 2/3 of the refinancing rate, subtract from it the amount of interest actually paid and deduct 35% of personal income tax from the difference. Since the founders did not repay the loans, the repayment date did not come, the tax was not charged.

Since 2016, the material benefit, according to the changes made to the Tax Code, is calculated monthly. If you do not repay an interest-free loan for a long time, you will have to pay a monthly tax on material benefits. For founders, this method of withdrawing money is now becoming less attractive.

When you can not paypersonal income tax

You will not have to pay personal income tax from the amount of material benefits if the employee took a loan to purchase housing. In this case, the loan agreement must specify the purpose for which the borrowed funds will be spent. After purchasing a home, you must provide the employer with documents confirming the intended use of funds. If an employee with a mortgage loan takes out a loan at a better interest rate to pay off the mortgage at the bank, personal income tax must be withheld, because the housing was purchased before the money was borrowed.

How does the issuance of a loan affect income tax and STS

Amounts of money issued as loans cannot be included in the amount of expenses taken into account when determining the tax base for income tax and the simplified tax system. If the loan is issued with interest, then their amount is included in the base as other non-operating income, and income tax is charged on it.

Forgiving an employee's debt

Legislation allows an employer to forgive an employee-borrower a debt or the rest of it. This can happen if the employee has a difficult financial situation. There are two ways to apply for debt forgiveness:

1. Conclude an additional agreement to the loan agreement.
2. Create a donation agreement.

When writing off a debt to an employee who has been issued a loan, entries are made to the debit of the "Other income and expenses" account.

In any case, the wholethe unpaid loan amount becomes the income of the borrower and income tax of 13% must be withheld from it. But in the second case, the amount of 4000 rubles. will be exempt from taxation, on the basis that Article 217 of the Tax Code states that gifts worth up to 4,000 rubles. No personal income tax.

For income tax, the amount of the unpaid loan cannot be attributed to expenses and will not reduce the tax base. But insurance premiums for the amount forgiven under the agreement will have to be charged. Insurance premiums are not charged on the donated amount. So it is more beneficial for both parties to act by drawing up a donation agreement.