Prescribed rate holds steady for Q3 2026
The Canada Revenue Agency prescribed rate will remain unchanged at 3 per cent for the third quarter of 2026, the fifth consecutive quarter the rate has held steady. It will be in effect from July 1st, 2026 to September 30th, 2026.
As noted in a previous blog, the CRA’s prescribed rate is “used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans.” Low-interest loans are often employed as a tax-planning tool by entrepreneurs and higher net-worth families.
The prescribed rate is based on the three-month average of Government of Canada Treasury bill yields. The rate reached 6 per cent (10 per cent on outstanding debts to the Canada Revenue Agency) before beginning to decline in the wake of the COVID-19 pandemic.
Other CRA interest rates for Q3 2026 include the following:
- The rate on overdue taxes, CPP contributions and EI premiums: 7 per cent (unchanged from Q2 2026)
- The rate on non-corporate taxpayer overpayments: 5 per cent (unchanged from Q2 2026)
- The rate on corporate taxpayer overpayments: 3 per cent (unchanged from Q2 2026)
- The rate used to calculate taxable benefits for employees and shareholders for interest-free and low-interest loans: 3 per cent (unchanged from Q2 2026)
- The rate for corporate taxpayers’ pertinent loans or indebtedness: 6.30 per cent (an increase from 6.20 per cent in Q1 2026)
While a static prescribed rate can influence strategic tax planning decisions, particularly among family members, the 7 per cent interest rate on overdue taxes can also influence decision-making around debt repayment to the CRA. But the best approach is to always clear outstanding balances to Ottawa as quickly as possible. Doing so mitigates the financial risk from compound interest charges and/or non-compliance penalties.
Armando Iannuzzi, Co-Managing Partner
For tax planning assistance, or to discuss the prescribed rate’s impact on your financial situation, contact a member of our team.
