CRA prescribed interest rates — 7% on overdue tax, 3% on shareholder loans
The prescribed rate prices overdue balances and shareholder loans, both settled at the year end.
Quick answer: The CRA sets its interest rates every quarter. For 1 October to 31 December 2026 the rate on overdue tax, CPP and EI is 7%, the rate that values a shareholder or employee loan benefit is 3%, and overpayments earn 3% for corporations and 5% for individuals.
The shareholder-loan rate is the one that matters to an owner, and it changes every quarter. Ask what it does to your loan.
The prescribed rates for this quarter
| Figure | 2026 |
|---|---|
| Overdue tax, CPP contributions and EI premiums | 7% |
| Overdue GST/HST | 7% |
| Overpayments refunded to a corporation | 3% |
| Overpayments refunded to an individual | 5% |
| Employee and shareholder loan benefit | 3% |
| Corporate pertinent loans or indebtedness | 6.30% |
The gap is deliberate: 7% out, 3% or 5% back. A balance owing is expensive; an overpayment left with the CRA earns little.
How it works
The CRA sets several rates, reset each calendar quarter by a statutory formula. This page shows those in force from 1 October to 31 December 2026. So when someone quotes the CRA interest rate, the first question is which of these rates it is, and for which quarter.
The common one applies to overdue income tax, GST/HST, and unremitted CPP and EI: 7% this quarter, compounded daily, not deductible.
A much lower rate runs the other way: on overpayments the CRA pays 3% to corporations and 5% to individuals.
The one that matters most to incorporated owners isn’t about a CRA debt. A corporate loan to a shareholder or employee at no interest, or below the prescribed rate, creates a taxable benefit on the shortfall, measured this quarter at 3%.
How it applies to you
Anyone carrying a balance with the CRA, waiting on a refund, or holding a loan from their own corporation.
For owner-managers, that is the live rate. Draw $50,000 interest-free and a benefit is computed at the prescribed rate for each quarter outstanding, included in income though no cash moved.
Paying interest at or above the prescribed rate removes it, if paid within 30 days of the end of the year — by 30 January, not accrued.
How to calculate it
A shareholder loan, worked through on this quarter’s rate:
| Step | Detail |
|---|---|
| Loan outstanding from the corporation | $50,000, interest free |
| Prescribed rate for the quarter | 3% |
| Benefit for one quarter | $50,000 × 3% × 3/12 = $375 |
| If outstanding all year at 3% | about $1,500 of taxable benefit |
| Interest actually paid by 30 January | reduces the benefit dollar for dollar |
The rate applies quarter by quarter, so a loan spanning a change is calculated in parts. Interest counts only if paid in cash within 30 days of year end; an accrual entry doesn’t.
What changed
Rates change quarterly, so old articles often quote the wrong quarter. The 3% loan rate is the one that turns an interest-free shareholder loan into a taxable benefit.
What to do
Before year end, pay interest on an interest-free shareholder loan or accept the benefit. Paying is usually cheaper, if it leaves your account by 30 January.
If you owe the CRA, understand that 7% compounding daily and non-deductible is a worse cost than most commercial credit. Paying the CRA first is often the correct order.
Rates change quarterly; always check which quarter a figure is for. That applies to the CRA prescribed rate on shareholder loans as much as to the rate charged on overdue tax.
The practical point. An interest-free shareholder loan’s benefit is measured at 3%. Paying at least the prescribed rate by 30 January of the following year removes it.
The terms used on this page
- Prescribed rate
- An interest rate set by the CRA under a statutory formula and reset each calendar quarter, rather than negotiated or chosen.
- Shareholder loan benefit
- The taxable amount arising when a corporation lends to a shareholder interest-free or below the prescribed rate.
- Overdue remittance rate
- The interest the taxpayer pays on amounts owed to the CRA.
- Overpaid remittance rate
- The interest the CRA pays on amounts it owes back to the taxpayer.
- Pertinent loan or indebtedness
- A specific election-based category of loan to a foreign affiliate, carrying its own prescribed rate.
Common questions about CRA prescribed interest rates
What is the CRA prescribed interest rate right now?+
How often do these rates change?+
Is the interest the CRA charges deductible?+
Where this comes from
Every figure on this page is taken from the source below, not from interpretation:
- CRA — Interest rates for the fourth calendar quarter of 2026
- CRA — Prescribed interest rates, all quarters
General information, not tax advice. It can’t reflect your circumstances or create a professional relationship. Confirm anything that affects a decision — send an enquiry.
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It prices shareholder loans, instalments and prescribed-rate arrangements; advice on the loans and instalments they price covers those.
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