CRA Prescribed Interest Rates
The base rate the CRA sets every calendar quarter, and the four rates that flow from it — arrears interest, refund interest, and prescribed-rate family loans.
The four tiers, explained
The CRA publishes one base "prescribed rate" each quarter under Income Tax Regulations s.4301, then derives three more rates from it:
Base rate
Used for taxable benefits on interest-free or low-interest loans from an employer or a corporation to an employee or shareholder, and for prescribed-rate family loans used in income splitting.
Overdue taxes, CPP & EI (base + 4pp)
Arrears interest charged on unpaid income tax, CPP contributions and EI premiums — compounds daily under ITA s.161(1) from the day after the balance was due.
Individual refund interest (base + 2pp)
Interest CRA pays individuals on tax overpayments and refunds owed to them.
Corporate refund interest (equal to base)
Interest CRA pays corporations on tax overpayments — the only tier with no percentage-point addition over the base rate.
Quarterly rate history
Every rate below is read directly from the site's central rate table (never hand-typed into this page), so it can't drift out of sync with the arrears-interest and instalment calculators that use the same data.
| Quarter | Base rate | Overdue taxes / CPP / EI | Individual refunds | Corporate refunds |
|---|---|---|---|---|
| Q3 (Jul–Sep) 2026 | 3% | 7% | 5% | 3% |
| Q2 (Apr–Jun) 2026 | 3% | 7% | 5% | 3% |
| Q1 (Jan–Mar) 2026 | 3% | 7% | 5% | 3% |
| Q4 (Oct–Dec) 2025 | 3% | 7% | 5% | 3% |
| Q3 (Jul–Sep) 2025 | 3% | 7% | 5% | 3% |
| Q2 (Apr–Jun) 2025 | 4% | 8% | 6% | 4% |
| Q1 (Jan–Mar) 2025 | 4% | 8% | 6% | 4% |
| Q4 (Oct–Dec) 2024 | 5% | 9% | 7% | 5% |
| Q3 (Jul–Sep) 2024 | 5% | 9% | 7% | 5% |
| Q2 (Apr–Jun) 2024 | 6% | 10% | 8% | 6% |
| Q1 (Jan–Mar) 2024 | 6% | 10% | 8% | 6% |
| Q4 (Oct–Dec) 2023 | 5% | 9% | 7% | 5% |
| Q3 (Jul–Sep) 2023 | 5% | 9% | 7% | 5% |
| Q2 (Apr–Jun) 2023 | 5% | 9% | 7% | 5% |
| Q1 (Jan–Mar) 2023 | 4% | 8% | 6% | 4% |
| Q4 (Oct–Dec) 2022 | 3% | 7% | 5% | 3% |
| Q3 (Jul–Sep) 2022 | 2% | 6% | 4% | 2% |
| Q2 (Apr–Jun) 2022 | 1% | 5% | 3% | 1% |
| Q1 (Jan–Mar) 2022 | 1% | 5% | 3% | 1% |
How the rate is set
Under Income Tax Regulations s.4301, CRA recalculates the base prescribed rate every calendar quarter from the average yield of Government of Canada 3-month Treasury Bills auctioned during the first month of the preceding quarter, rounded up to the next whole percentage point. The three dependent rates — overdue, individual refund, and corporate refund — are then set as fixed offsets from that base:
- Overdue taxes, CPP contributions and EI premiums — base rate + 4 percentage points.
- Individual (non-corporate) taxpayer refunds — base rate + 2 percentage points.
- Corporate taxpayer refunds — equal to the base rate, with no addition.
Arrears interest compounds daily under ITA s.161(1) — not monthly or annually — so the effective annual cost on an overdue balance is slightly above the stated rate.
Prescribed-rate loans for income splitting
A common estate and tax-planning strategy uses the base rate tier, not the arrears rate. A higher-income spouse or parent lends funds to a lower-income spouse, adult child, or family trust at the CRA's prescribed rate in effect when the loan is made. The borrower invests the money and pays tax on the investment income at their own (lower) marginal rate, provided the interest owing on the loan is actually paid to the lender by January 30 of the following year.
The rate is locked in for the life of the loan — if the prescribed rate rises in a later quarter, an existing prescribed-rate loan keeps its original, lower rate. This makes low-rate quarters (like the current 3%) a comparatively attractive window to set up a new loan, since the borrowing cost the lender must charge to make the split effective stays cheap for as long as the loan is outstanding.
Related CRA interest & penalty calculators
Use the CRA arrears interest calculator to estimate daily-compounded interest on an overdue balance across one or more quarters using these exact rates, the instalment interest penalty calculator to apply CRA's $1,000-threshold penalty formula for missed quarterly instalments, or the late-filing penalty calculator to combine the ITA s.162 late-filing penalty with arrears interest for a return filed after the deadline. See CRA tax deadlines for every 2026 filing and instalment due date.
Frequently asked questions
What is the CRA prescribed interest rate right now?
The CRA base prescribed rate is 3% for Q3 (Jul–Sep) 2026. Overdue taxes, CPP contributions and EI premiums are charged 7% (base + 4 points), individual refunds earn 5% (base + 2 points), and corporate refunds earn 3% (equal to the base rate).
What is a prescribed-rate loan and how does it use this rate?
A prescribed-rate loan is an income-splitting strategy where a higher-income spouse or parent lends money to a lower-income family member (or a family trust) at the CRA's base prescribed rate — 3% for Q3 (Jul–Sep) 2026. If interest is paid annually by January 30 of the following year, investment income earned on the loaned funds is taxed in the borrower's hands instead of the lender's, and the rate is locked in for the life of the loan even if the prescribed rate later rises.
Does CRA arrears interest compound daily?
Yes. Interest on overdue taxes compounds daily under ITA s.161(1), so the effective annual cost is slightly above the stated quarterly rate. It runs from the day after the balance was due until the amount is paid in full, and also applies to unpaid penalties and previously assessed interest.
How often does the CRA prescribed rate change?
Every calendar quarter (January, April, July, October), based on the average yield of 3-month Government of Canada Treasury Bills auctioned in the first month of the prior quarter, rounded up to the next whole percentage point.
Official sources
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