Interest Rate Change for Employer Loans

In an effort to manage the effects of the COVID-19 lockdown on the economy, the Reserve Bank has announced a further historic cut to the repurchase rate (repo rate). The repo rate will be cut by 50 basis points, from 4.25% to 3.75%, effective 22 May 2020.

The change in repo rate impacts the “official rate” used to calculate the fringe benefit on employer loans. The official rate is set at an interest rate of 100 basis points above the repo rate and any changes in the repo rate will only affect the official rate from the beginning of the next month. The official interest rate for employer loans will therefore change from 5.25% to 4.75% effective 1 June.

As always, you do not need to take any action to implement the new interest rate. We have already updated the system to reflect these changes. All employer loans on payslips dated from 1 June 2020 will make use of the new interest rate. As our system is built to be intuitive, any payslips dated before 1 June 2020 will make use of the previous interest rate.

You can find more information on employer loans on our help page here.

If you have any questions, please do not hesitate to contact our support team.

Team SimplePay

Interest Rate Change for Employer Loans

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.

Team SimplePay

Interest Rate Change for Employer Loans

The South African Reserve Bank has decided to decrease the repurchase rate (repo rate) by 25 basis points, effective from 16 January 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 7.5% to 7.25%, effective 16 January 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 16 January onwards will use the new interest rate. If a payslip dated after 16 January was finalised before the 16 January (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 16 January, 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.

Team SimplePay

Interest Rate Change for Employer Loans

The South African Reserve Bank has decided to decrease the repurchase rate (repo rate) by 25 basis points, effective from 19 July 2019.

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 7.75% to 7.5%, effective 19 July 2019.

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 19 July onwards will use the new interest rate. If a payslip dated after 19 July was finalised before the 19 July (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 19 July, 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.

Team SimplePay

Interest Rate Change for Employer Loans

The South African Reserve Bank has decided to increase the repurchase rate (repo rate) by 25 basis points, effective from 23 November 2018.

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 increases from 7.5% to 7.75%, effective 23 November 2018.

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 23 November onwards will use the new interest rate. If a payslip dated after 23 November was finalised before the 23 November (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 23 November, 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.

Team SimplePay

Interest Rate Change and New Features

Due to the recent drop in interest rates by the reserve bank, the fringe benefit interest rate on low or interest free loans will now be 6% instead of 6.5%.

Once again there are some features that have been released but not announced yet:

  • Vastly improved reinstatement: If an employee has left your company, possibly works for someone else, but later returns, you longer have to capture them as a new employee as with most payroll systems. Just re-instate them and the system will start a new service period for them.
  • Skills & Equity: You can now enter demographic info used for EE and Skills reporting. The reports are coming soon, but at least you can get started on getting the data ready.