Interest-Free or Low-Interest Loans
A person receives a taxable benefit if you grant an interest-free loan or a loan at a rate lower than the rate set out in section 4301 of the federal Income Tax Regulations because of the person's office or employment (past, present or future) or because the person is a shareholder.
| 1st quarter (January 1 to March 31) | 2nd quarter (April 1 to June 30) | 3rd quarter (July 1 to September 30) | 4th quarter (October 1 to December 31) |
|---|---|---|---|
| 4% | 5% | 5% | 5% |
The interest rates for years other than 2023 are provided on the Government of Canada website.
For more information, see:
Excluded loans
No benefit should be calculated for the following types of loans (or for any portion of those types of loans):
- a loan that is included in the income of a person or partnership under Part I of the Taxation Act; or
- a loan on which the interest is paid or payable to the creditor only by the debtor, and for which the interest rate is equal to or higher than the rate that would have been agreed on, when the loan was contracted, by parties dealing with each other at arm's length provided that:
- lending was part of the creditor's normal activities, and
- neither party had contracted the loan because of an office or employment, or by reason of being a shareholder.