Canada Revenue Agency prescribed rate holds steady for Q4 2024
The Canada Revenue Agency prescribed rate will remain at 5 per cent for the fourth quarter of 2024—the period from October 1st to December 31st.
It is the second straight quarter the rate has remind unchanged. The prescribed rate reached record highs following the peak of the pandemic in 2022, surging to 6 per cent earlier this year, with the interest rate on debts to the CRA reaching 10 per cent. Both rates have since moderated. The prescribed rate is based on the three-month average of Government of Canada Treasury bill yields.
As we’ve explained in previous prescribed rate updates, the prescribed rate is “used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans.” The prescribed rate is the interest rate on any tax balances owed to the CRA or balances owed to individuals or corporations by the Agency.
Other CRA interest rates for the fourth quarter of 2024 include:
- The rate on overdue taxes, CPP contributions and EI premiums: 9 per cent*
- The rate on non-corporate taxpayer overpayments: 7 per cent*
- The rate on corporate taxpayer overpayments: 5 per cent*
- The rate used to calculate taxable benefits for employees and shareholders for interest-free and low-interest loans: 5 per cent*
- The rate for corporate taxpayers’ pertinent loans or indebtedness: 8.53 (down from 8.96 per cent in Q3)
*Unchanged from Q3
While steady, the 9 per cent interest rate on debts to the CRA is still high by recent historical standards. The rate dipped to only 1 per cent between Q3 2020 and Q3 2022. As always, we recommend minimizing or avoiding debt with the federal government to protect your personal or organizational balance sheet, while mitigating the risk of compliance-related penalties and other financial challenges.
Clearing debts with Ottawa is always advisable, even when the interest rate on those balances has stabilized.
Armando Iannuzzi, Co-Managing Partner
For tax planning assistance, or to discuss the prescribed rate’s impact on your personal or corporate financial situation, contact a member of our team.
