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.

Alberta Economy Heating Up

It certainly seems as though Alberta is enjoying success that other jurisdictions can only dream about.  Unlike Europe, where debt troubles abound and bailouts are being discussed on every corner, or the US where unemployment is still a major problem in many areas, or even some of Canada’s more troubled provinces like Ontario where manufacturing is struggling and the debt load is escalating, we Albertans have it pretty good!

Recently we found out that Alberta tops Canada’s growth rankings, according to RBC, that Edmonton’s affluence recently attracted a major US retailer, and that employers in Western Canada are optimistic about hiring, among other good news articles.

As you can imagine, all of this growth in Western Canada drives demand for employees and companies looking to hire are actively seeking new ways to attract and retain talented people.

We’re biased, of course, but we think that a Group Employee Mortgage Plan is a unique and very effective way to do just that.  If you would like to learn more, then we would be happy to answer any of your questions.  Feel free to contact us anytime.

Here’s a short video with a bit of background on the economy in Alberta:


Alberta Economy Creating Housing and Employment Growth

Recently Alberta’s economy has been performing very well, in particular in relation to other provinces and most of the US.  A lot of this can be attributed to a strong oil industry in our province, however, there are other underlying policies that help as well, such as relatively low taxes, a well-educated population, good sized centres in both Calgary and Edmonton, and a stable democracy.

Two examples of the success of Alberta’s economy are found in recent articles:

  1. Year-over-year employment growth highest in Alberta for March: Almost 65,000 jobs added since this time last year.
  2. Edmonton Housing Starts Jump

This is great news for our economy and lifts the fortunes of a number of different industries.

That said, it also poses a unique challenge for Alberta businesses who are seeking to attract and retain new employees.  Some questions they might find themselves asking are:

  • How can we compete for talent without breaking the bank?
  • How do we avoid rapidly escalating salaries like the last boom, while still being able to compete for great people?
  • What can we offer our existing staff or new hires that’s unique, different, valuable?

One option many employers may not have had access to before that can be a unique part of any good compensation plan is a Group Employee Mortgage Plan.  Essentially these plans can function as part of a benefits or compensation plan, allowing an employer to offer different classes of employees varying levels of mortgage subsidies, that, implemented properly, are allowed by the CRA and can be quite tax efficient for both the employer and employee.  Employers looking to shore up their HR practices in preparation for another labour shortage should consider the value of a mortgage subsidy program.

There are important guidelines to follow and rules that CRA requires employers to abide by when implementing one of these plans, much like other benefits.  When implemented properly with the help of a firm specializing in these programs, they can be a great attraction and retention tool and offer the employees a far more compelling benefit than a bonus, raise, or more dental work.