The CRA has announced an increase in the prescribed interest rates for amounts owing in the Second Quarter of 2018, with the basic rate rising from 1% to 2%.
The prescribed rate increase had been expected since January when the Bank of Canada raised its overnight rate. It’s the first increase since the prescribed rate dropped to 1% at the start of 2014.
The prescribed rate is determined quarterly by a formula in the Income Tax Regulations that calculates the average of three-month Government of Canada Treasury yields for the first month of the preceding quarter.
The following rates will be in effect April 1 to June 30:
6% on overdue taxes, CPP contributions and employment insurance premiums (up from 5% in Q1)
2% on corporate taxpayer overpayments (up from 1% in Q1)
4% on non-corporate taxpayer overpayments (up from 3% as Q1)
2% on taxable benefits for employees and shareholders from interest-free and low-interest loans (up from 1%)
5.18% for corporate taxpayers’ pertinent loans or indebtedness (up from 4.98%)
For a detailed list of prescribed rates for the 2Q 2018, please click here.