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The Charter of the French language and its regulations govern the consultation of English-language content.

Loan Made to an Employee

The value of the benefit related to a loan made to an employee is equal to the result of the following calculation:

The total of the following amounts

A = the interest on each debt, calculated at the prescribed rate for the period of the year during which the debt is outstanding; and

B = the interest paid or payable for the year on each debt by the employer (that is, by the person or partnership that employs or intends to employ the individual, or by a person that is not the debtor and that is related to the employer);

minus the total of the following amounts

C = the interest for the year paid on each debt within 30 days after the end of the year; and

D = any portion of the interest in paragraph B that the employee reimburses the employer within 30 days after the end of the year.


All debts referred to in paragraphs A and B that an employee contracts by reason of their office or employment and that are not considered excluded loans must be taken into account, regardless of whether the interest rate is lower than, equal to or higher than the prescribed rate. See the Interest-Free or Low-Interest Loans page.

You have to include the value of the benefit related to a loan made to an employee in boxes A and L and, where applicable, in box G of the employee's RL-1 slip (see courtesy translation RL-1-T). For more information, go to the Benefit Provided to an Employee page.

See guide IN-253-V, Taxable Benefits, for an example calculation.

Debt contracted to acquire investments

A loan may be a debt contracted to acquire investments. When this is the case, the employee can deduct the value of the benefit in their income tax return.

If the benefit results from a debt contracted to acquire investments, you have to enter “L-4” in a blank box of the employee's RL-1 slip, followed by the amount of the benefit.

Loan made to an employee who relocates

The same rules for calculating the value of the benefit also apply to interest-free and low-interest debts contracted after February 23, 1998, by an employee who relocated in order to begin employment at a new workplace after September 1998, provided it is reasonable to conclude that, but for the employee's office or employment, the loan either would not have been made or would not have been made under the same terms.

In the case of an employee who began employment at a new workplace before October 1998, the same rules apply unless the employee moved to be at least 40 kilometres closer to that location.

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