Trend of Low Prescribed Rates Continues
The prescribed rates have been announced by CRA for the final quarter of 2010 and the trend of low interest rates continues on the same path we have seen for the past seven quarters. These low prescribed rates - a 1% rate for certain taxable benefits and loans provides a great opportunity to use low-taxed corporate dollars to fund family income splitting, the purchase of new vehicles, new investments or to fund employer-required moves. Advisors should also consider speaking to their clients about opportunities for inter-spousal and shareholder loans with the rates that are currently available.
The Canada Revenue Agency announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporate and non-corporate taxpayers. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from October 1 to December 31, 2010.
Income tax
- The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance Premiums will be 5%.
-
The interest rate paid on overpayments by corporate taxpayers will be 1%.
-
The interest rate paid on overpayments by non-corporate taxpayers will be 3%.
-
The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.
Other taxes
The interest rate on overdue and overpaid remittances for the following taxes will be:
|
Tax and Duty |
Overdue remittances |
Overpaid remittances
Corporate/Non-Corporate |
|
GST |
5% |
1% / 3% |
|
HST |
5% |
1% / 3% |
|
Air Travellers Security Charge |
5% |
1% / 3% |
|
Excise Tax (non GST) |
5% |
1% / 3% |
|
Excise Duty (except Brewer Licensees) |
5% |
1% / 3% |
|
Excise Duty (Brewer Licensees) |
3% |
N/A |
|
Softwood Lumber Products Export Charge |
5% |
1% / 3% |
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