Canada Revenue Agency prescribed rate remains at 6% for Q2 2024
The Canada Revenue Agency prescribed rate will remain at 6 per cent for the second quarter of 2024 (which extends from April 1st, 2024 to June 30th, 2024).
The prescribed rate last reached 6 per cent in the second quarter of 2001; it hovered at only 1 per cent during the COVID-19 pandemic. The current rate is up from 5 per cent in the fourth quarter of 2023. The prescribed rate is determined by the three-month average of Government of Canada Treasury bill yields.
As noted in a previous update, the prescribed rate is “used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans,” while setting 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 second quarter of 2024 include:
- The rate on overdue taxes, CPP contributions and EI premiums: 10 per cent
- The rate on non-corporate taxpayer overpayments: 8 per cent
- The rate on corporate taxpayer overpayments: 6 per cent
- The rate for corporate taxpayers’ pertinent loans or indebtedness: 9.04 per cent (down from 9.16 per cent in Q1)
At 10 per cent, the interest rate on outstanding debts to the CRA is at near-historic highs and will compound quickly if those balances are left unpaid. By paying down debts to Ottawa, both business owners and individuals can mitigate the risk of compliance-related penalties, added interest and other financial consequences.
A large outstanding balance to CRA is a financial albatross at the best of times, but even more so during an era of burdensome interest rates.
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.
