Time running out on 1% prescribed interest rate

Updated Wednesday, September 11, 2013 :: Views (14300)

The CRA prescribed interest rate used as the benchmark for prescribed rate loans is predicted to increase from 1% to 2% starting in October 2013.

If you are considering income splitting arrangements among family members that utilize prescribed rate loans, it would be advantageous to establish an agreement before October 1, 2013, as the current 1% rate may be applied throughout the duration of the loan. Although the current tax advantage of a prescribed rate loan arrangement may appear marginal, as investment yields increase, the advantage of having locked in the current prescribed rate will only improve. Are you planning retirement arrangements before the end of the year?

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