CRA Interest Rates to Remain at Record Low until July

Walter Harder

Although the government has yet to announce the prescribed interest rates for the second quarter, the rate will not change.

The prescribed rate is set by the average rate on 3-month treasury bills for the first month of the previous quarter, so, with January over, the rate for the second quarter of 2022 has now been determined.  Since the return rate remained below 1% for January, the prescribed rate will remain at 1%.

This is the rate used to determine how much, if any, of a low-interest employee or shareholder loan is taxable.  It’s also the minimum interest rate required on spousal loans to circumvent the attribution rules.

The 1% rate is increased by 4% (total 5%) to determine the interest CRA charges on overdue taxes, CPP contributions, or EI premiums, and it’s increased by 2% (total 3%) to determine the interest CRA pays individuals for overpaid taxes.

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