Canada Revenue Agency Updates Prescribed Rate for Q4 2013

The Canada Revenue Agency (CRA) has updated the Prescribed Rate of Interest for low-interest loans, effective October 1, 2013, to 2% – up from 1% for the previous quarter (and all the way back to April of 2009).

What does this mean to you? Well, if you’re thinking about getting a Group Employee Mortgage interest subsidy, your employer can subsidize your effective interest rate down to as low as 2% before triggering a taxable benefit. The Financial Post has an article about how this affects family loans among family members. These are now taxable below 2% as are a number of other loans at effective rates below 2%.

This increase to the Prescribed Rate also affects income splitting arrangements.

If you have questions about a Group Mortgage Interest Subsidy for your employees feel free to contact us anytime.