The prescribed rate on loans to family members will remain 3% in the fourth quarter of 2026, while the interest rate Canadians must pay on overdue tax will remain 7%.
The Canada Revenue Agency (CRA) published on Friday the prescribed annual interest rates for amounts owed to or by the agency for the period from Oct. 1 to Dec. 31.
The latest announcement keeps the prescribed rate steady for the sixth quarter in a row. Before the third quarter of 2025, the prescribed rate hadn’t been as low as 3% since the final quarter of 2022.
The rate the CRA charges on overdue tax, Canada Pension Plan contributions and employment insurance premiums is always four percentage points higher than the prescribed rate.
The prescribed rate is based on the average of three-month Treasury bills for the first month of the preceding quarter, rounded up to the next highest percentage point.
Prescribed-rate loans are often used for income splitting with a spouse, common-law partner or other family members. A loan can be made directly to an individual or to a family trust, which can then distribute income to members in lower tax brackets. The lower the prescribed rate, the greater the tax-planning opportunity.
Other key CRA announcements for Q4 2026 include:
- the rate to be paid on corporate taxpayer overpayments remains 3%;
- the rate to be paid on non-corporate taxpayer overpayments remains 5%;
- the rate used to calculate taxable benefits for employees and shareholders from interest‑free and low-interest loans remains 3%; and
- the rate for corporate taxpayers’ pertinent loans or indebtedness is 6.29%, down from 6.3% the previous quarter.
See the full list of CRA’s prescribed interest rates.