Canada Revenue Agency prescribed rate drops to 5 per cent for Q3 2024
For the first time in nearly two years, the Canada Revenue Agency prescribed rate will not rise, instead decreasing to 5 per cent from 6 per cent for the third quarter of 2024 (July 1st, 2024 to September 30th, 2024.
The prescribed rate crested at 6 per cent earlier this year, after lingering at record lows of 1 per cent during the pandemic and rising steadily thereafter. The prescribed rate is determined by the three-month average of Government of Canada Treasury bill yields.
As we outlined previously, the prescribed rate is “used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans.” It sets the interest rate on outstanding balances owed to the CRA and on balances owed by the CRA to individuals and corporations.
Other CRA interest rates for the third 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 for corporate taxpayers’ pertinent loans or indebtedness: 8.96
While the news that the interest rate on outstanding debts to the CRA is decreasing to 9 per cent from 10 per cent will be welcomed by businesses and individual taxpayers, the cost of carrying any debt to Ottawa remains eye-wateringly high. Balances compound quickly and, when coupled with compliance-related penalties, can produce an unmanageable financial burden for debtors.
As always, ensure your debts to the CRA are paid promptly—even at a time when the prescribed rate is finally beginning to decrease.
Armando Iannuzzi, Co-Managing Partner
For tax planning assistance and to discuss the impact that the prescribed rate could have on your personal or corporate financial situation, contact a member of our team.
