Tuesday, October 20

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The prescribed rate for a spousal loan, you know?

(Photo: 123RF) GUEST EXPERT. This information has gone somewhat under the radar, but as of July 1, 2020, the prescribed rate for a spousal loan is 1%. It was 2% since April 2018. But what is the prescribed rate? It is in fact a reference rate which is set quarterly by the Canada Revenue Agency (CRA) and which serves as the basis for loan strategies between members of the same family. Indeed, the attribution rules do not apply when a loan is made at the prescribed rate, which allows income splitting strategies with the spouse or with adult children who have a lower income and, in turn, , to obtain a lower tax rate. Such planning, which reduces the tax burden on the family, is simple, efficient and inexpensive. H...