Help & Contact: 1 866 953 4769
Last updated: June 09 2021
OAS: Third Quarter Inflation Rate Changes
Walter Harder, DFA-Tax Services Specialist, DFA-Bookkeeping Services Specialist, RWM
Most tax-related amounts are adjusted annually, but each quarter two rates are determined and adjusted if required. In spite of the economic slowdown caused by the pandemic, inflation has actually picked up.
If you are working clients interested in locking in low prescribed interest rates for shareholder loans, clients with tax debt, or with OAS recipients, here’s what you need to know:
Old Age Security and the Guaranteed Income Supplement
Each quarter, the amount of Old Age Security and the Guaranteed Income Supplement is indexed according to changes in the Consumer Price Index.
According to the formula for indexation of Old Age Security and the Guaranteed Income Supplement, recipients can (unofficially) expect a raise of about 1.3% starting in July. For recipients of the full OAS amount of $626.49 per month, that means an increase of $8.04 per month to $626.49.
Prescribed Interest Rates
Also, each quarter the prescribed rate of interest is set according to the average yield on three-month treasury bills for the first month of the previous quarter.
In March 2021, the average rate of return for the three-month treasury bill was 0.11%, so the prescribed interest rates for the third quarter will continue as shown below:
|
Rate |
Use |
|---|---|
|
1% |
|
|
3% |
|
|
5% |
|
*Due to the pandemic, interest will not be charged on amounts owing on the 2020 return until May 2022, if the taxpayer had taxable income below $75,000 and was reporting taxable pandemic support payments.
ADDITIONAL EDUCATIONAL RESOURCES: DFA-Tax Services Specialist Program™
With your specialization in personal taxation, you’ll provide sound advice and prepare a broad range of returns—from simple to complex—and then help families accumulate, grow, preserve and transition wealth with tax-efficiency. You’ll offer year-round counsel tailored to your clients’ specific financial goals.
Enrol now and receive $1479.96 in savings for a total designation cost of $4,084.56!
