The South African Reserve Bank has decided to decrease the repurchase rate (repo rate) by 100 basis points, effective from 20 March 2020.
The official interest rate used for calculating the fringe benefit on low or interest free loans to employees is set as 100 basis points above the repo rate. This means that the interest rate used for calculating the fringe benefit on employer loans decreases from 7.25% to 6.25%, effective 20 March 2020.
If you’re a SimplePay user, you do not need to take any action to implement the new interest rate, as we have already updated our system to reflect these changes. Therefore, all payslips dated and finalised from 20 March onwards will use the new interest rate. If a payslip dated after 20 March was finalised before the 20 March (i.e. it was finalised in advance), you will need to unfinalise the payslip and then finalise it again for the changes to take effect. As we have built our system to be intuitive, the previous interest rate will be used if you are still preparing payslips dated before the 20 March, regardless of what date you physically finalise the payslip.
If you are unsure of how to capture employee loans or calculate the fringe benefit on them, refer to our help page here.