Home Relocation Loans and Home Purchase Loans

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If a home relocation loan or home purchase loan is made to an employee, the taxable benefit is calculated in the same way as for interest-free or low-interest loans and debts.

However, the amount of interest, calculated at the prescribed rate (see Loan Made to an Employee), must not be more than the interest the individual would have had to pay if interest had been calculated at the rate of 8%, in the case of a debt contracted before May 1, 1987, or, in all other cases, at the rate prescribed or set at the time the debt was contracted.

Note

A loan made by a financial institution to one of its employees does not constitute a taxable benefit if the loan is made after December 31, 1993, under the Accent on Renovation Program, or after September 21, 1995, under the Renovate Program or the Revitalization of Old Neighbourhoods Program.

If the term of repayment of a home relocation loan or a home purchase loan is more than five years, the outstanding balance at the end of the five years is considered a new loan, in the form of a home purchase loan, contracted on the same day by the individual. The value of the benefit must therefore be calculated using the prescribed rate in effect on the day this new loan is contracted.

You have to include the value of the benefit in boxes A, G and L of the employee's RL-1 slip (see courtesy translation RL-1-T).

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