Rising interest rates continue to affect the Canada Revenue Agency’s (CRA) prescribed rates, with most increasing by one percentage point next quarter.
The CRA has confirmed the prescribed annual interest rates for amounts owed to or by the agency in the fourth quarter of 2022, which runs from Oct. 1 to Dec. 31.
The prescribed rate on loans to family members has risen to 3% from 2%. Prescribed rate loans can be used to split investment income with a spouse, common-law partner or other family member with a lower income — although this strategy becomes less viable as prescribed rates rise.
Clients have until Sept. 30 to lock in the 2% family loan rate. That rate was 1%, the lowest possible, from July 1, 2020 to June 30, 2022.
The interest rate charged on overdue taxes, Canada Pension Plan contributions and employment insurance premiums will rise to 7% from 6%. The rate to be paid on corporate taxpayer overpayments will be 3%, up from 2%. And a 5% rate will be applied to non-corporate taxpayer overpayments, up from 4%.
The rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 3%, up from 2%.
Access the full list of the CRA’s prescribed interest rates.