23 What are prescribed rates?
Harman Hayer
The prescribed rates are used to determine the interest on overdue taxes and penalties. The prescribed rate is also used to calculate interest on refunds (when the government owes you money) and to help calculate the amount of taxable benefits on items like interest-free or low-interest employee loans.
Which tax rates apply on late payments? What do the other prescribed rates apply to?
|
|
Late Tax |
Refunds |
Benefits |
|
|
2022 Quarter |
[Reg. 4301(a)] |
[Reg. 4301(b)] |
[Reg. 4301(c)] |
|
|
|
|
Individuals |
corporations |
|
|
October – December |
7% |
5% |
3% |
3% |
|
July – September |
6% |
4% |
2% |
2% |
|
April – June |
5% |
3% |
1% |
1% |
|
January – March |
5% |
3% |
1% |
1% |
(prescribed rates are available in the FITAC under “Tax Rates and Tools”)
The “Late Tax” column indicates the prescribed rate of interest that the tax payer must pay on the overdue amounts owing to the CRA.
The “Refunds” column indicates the prescribed rate of interest that CRA must pay to on the overdue amounts owing to the tax payer.
The “Benefits” column shows the prescribed rate that is used when calculating relevant employee benefits (for example, employee loans).
Interactive Content (Author: Harman Hayer, March 2019).
Interactive Content (Author: Siyuan Shen using the works of Harman Hayer, June 2019)
References and Resources:
- ITR – 4301(a), 4301(b), 4301(c)
- Article – “Prescribed Interest Rates” (Author: Government of Canada)
- Competency map: 6.4.1
January 2019
