CRA Prescribed Interest Rates for Q3–Q4 2026: What Changes for Shareholder Loans, Late Instalments, and CRA Debt
Reviewed by Bader A. Chowdry, CPA, CA, LPA on
The CRA prescribed interest rate for Q4 2026 (October 1 to December 31, 2026) is 3% for the shareholder loan benefit under ITA s.80.4 and 7% on overdue tax, as published by the CRA and in force for the quarter. For Ontario owner-managers in Mississauga and across the GTA, the 3% rate sets the interest a shareholder pays the corporation to avoid a taxable benefit, while the 7% rate prices any balance owing to the CRA.
What are the CRA prescribed interest rates for Q4 2026?
The CRA’s fourth-quarter 2026 announcement sets five income tax rates that are in force from October 1 to December 31, 2026. They are administrative rates published by the agency, so they apply for the quarter without any further step.
| What the rate applies to | Q3 2026 (Jul 1 – Sep 30) | Q4 2026 (Oct 1 – Dec 31) |
|---|---|---|
| Overpayments refunded: non-corporate taxpayers 5%, corporations 3% | 5% / 3% | 5% / 3% |
| Overdue taxes, CPP contributions, EI premiums | 7% | 7% |
| Corporate pertinent loans or indebtedness (PLOI) | 6.30% | 6.29% |
| Taxable benefit on interest-free and low-interest loans (employees and shareholders) | 3% | 3% |
The third-quarter 2026 page shows the same four headline rates, so the only movement into Q4 is the pertinent-loan rate. The same 7% overdue rate and the same 3% and 5% overpayment rates also apply to an overdue or overpaid GST/HST remittance in Q4. These Q4 rates stop applying on December 31, 2026; the CRA publishes a separate set for the quarter that starts January 1, 2027, and that set replaces this table.
How the base rate and its add-ons actually work
There is one base rate, and every other figure is that base plus a fixed add-on set by Income Tax Regulation 4301, which is in force. The base is the average yield on three-month Government of Canada Treasury Bills sold at auctions run by the Bank of Canada during the first month of the preceding quarter, rounded up to the next whole percentage point. The Department of Finance’s CRA rates page describes the same method and lists the July 2026 yields behind the Q4 base of 3%.
From that base, Regulation 4301 builds the rest:
- Amounts you owe the CRA: the base plus 4 percentage points, which gives 7% for Q4.
- Refunds the CRA owes a corporation: the base plus nothing, so 3%.
- Refunds the CRA owes anyone else: the base plus 2 percentage points, so 5%.
- Every other provision that refers to a prescribed rate, including the s.80.4 loan benefit: the base itself, so 3%.
- Pertinent loans under ITA s.17.1: the base rounded to two decimals instead of a whole point, plus 4 points, which is how the CRA arrives at 6.29%.
An earlier version of this page described the shareholder-loan rate as the base plus a 4-point add-on. That was wrong: the 4-point add-on applies to amounts owed to the CRA, and the s.80.4 benefit uses the unadjusted base, which is why the loan-benefit rate (3%) sits four points below the overdue rate (7%). The CRA’s guidance on corporate interest also confirms that arrears and instalment interest are compounded daily.
Why does this matter for shareholder loans specifically?
Two separate rules in the Income Tax Act apply to a loan from your corporation, and they are easy to confuse. Both are in force.
The first is the income inclusion. Under ITA s.15(2), the Act provides that a shareholder (or a person connected with one) who receives a loan from the corporation includes the full amount of the loan in income for the year it was received. Subsection 15(2.6) switches that off when the loan is repaid within one year after the end of the corporation’s taxation year in which it was made, as long as the repayment is not part of a series of loans and repayments.
The second is the interest benefit. Under ITA s.80.4(2), the Act provides that when a shareholder borrows by virtue of the shareholding, the shareholder is deemed to receive a benefit equal to interest at the prescribed rate for the period the loan was outstanding in the year, minus the interest for the year that the shareholder actually pays within 30 days after the year ends. A person connected with a shareholder, meaning a non-arm’s length person or an affiliate of the shareholder, is caught by the same rule under s.80.4(8). With the Q4 2026 rate at 3%, that is the minimum to track for October to December.
The two rules interact. A loan that is fully included in income under s.15(2) does not also attract the s.80.4 benefit, but most owner-managers aim to avoid the inclusion, which leaves the interest benefit as the live question for every quarter the balance is outstanding.
What should I check before the end of 2026?
Three things, in order. First, list each quarter your shareholder loan was outstanding in 2026 and the rate for each quarter; the benefit is computed period by period, not at one blended rate. Second, if you have any balance owing to the CRA (corporate tax instalments, a reassessment, GST/HST arrears), price it at the current 7% with daily compounding rather than last year’s number. Third, if you plan to repay a shareholder loan, put the repayment date next to the s.15(2.6) one-year deadline for the year the loan was made.
For a corporation with a December 31 year-end, a loan advanced during 2026 must be repaid within one year after December 31, 2026 to stay outside s.15(2), subject to the series rule. Interest to cover the 2026 benefit has to be paid within 30 days after the end of 2026 to count.
What an LPA adds: the decision rule, the failure mode, and a worked example
The decision rule Insight Accounting CPA applies when closing a CCPC’s year-end file and T2 return is simple: a shareholder loan is either repaid on time with genuine funds, or interest at the prescribed rate is calculated per quarter and paid within 30 days after the year ends. Anything in between gets documented as a decision with the owner, not left to the bookkeeping.
The named failure mode is the round-trip repayment. A shareholder repays the loan just before the one-year deadline, then borrows the same amount back a few weeks later. Subsection 15(2.6) only applies where the repayment was not part of a series of loans and repayments, so a repayment funded by re-borrowing can leave the original loan exposed to the full s.15(2) inclusion. Repaying through a bonus paid through payroll and reported on a T4, or through a dividend reported on a T5, is another route, with its own tax cost to compare before the deadline, not after.
Illustrative example: a shareholder loan and an overdue balance in Q4 2026
This is an illustrative example with stated assumptions, not a client file. Assume a shareholder owes the corporation $100,000 for the whole of Q4 2026 (92 days), pays no interest, and the loan is not caught by s.15(2). Using simple interest on a 365-day year at the Q4 rate of 3%, the s.80.4 benefit for the quarter is about $756.16. Paying at least that amount for the period, within 30 days after the end of 2026, removes the benefit for those 92 days.
Now assume the same owner’s corporation has $20,000 of tax overdue for the same 92 days. At the 7% overdue rate compounded daily, arrears interest comes to about $355.97. The point is the asymmetry: the CRA charges four points more on what you owe it than the loan-benefit rate, so a balance owing to the CRA usually deserves attention before an optional prepayment elsewhere.
What this means for instalment planning, not just shareholder loans
Because instalment interest is charged at the same overdue rate, anyone tracking their September and December personal (T1) instalments (see our companion piece on the September 15 instalment deadline) should treat the 7% Q4 rate as the cost of guessing wrong. The CRA computes corporate instalment interest by an offset method, so an early or larger payment can offset interest on a late one in the same year. Where cash is tight, the no-calculation or prior-year method is usually the more predictable choice when the overdue rate is high.
Frequently asked questions
Does the prescribed rate apply retroactively if it changes mid-loan?
No. Each quarter’s rate applies only to interest accruing during that quarter — a loan outstanding across multiple quarters is calculated in separate pieces, not at a single blended rate for the whole period.
Is the rate CRA charges me the same as the rate CRA pays me?
No. For Q4 2026 the CRA charges 7% on amounts you owe. On refunds, non-corporate taxpayers such as individuals receive 5% and corporations receive 3%. Regulation 4301 adds 4 points to the base for amounts owed, 2 points for non-corporate refunds and nothing for corporate refunds.
What happens if I pay shareholder-loan interest late?
Under s.80.4(2), only interest for the year that reaches the corporation within 30 days after the year ends reduces the benefit. A payment made after that window does not reduce the benefit for that year.
Where can I find the current quarter’s exact rate?
The CRA publishes the prescribed interest rates for each quarter on its prescribed interest rates page, listed under Sources below. Check the specific quarter rather than relying on a figure from an older article, including this one.
Sources & references
- CRA prescribed interest rates, fourth calendar quarter 2026 — canada.ca; all quarters — canada.ca.
- Income Tax Regulation 4301 — prescribed rate mechanics — laws-lois.justice.gc.ca.
- Income Tax Act s.15(2) and s.15(2.6) shareholder loans — laws-lois.justice.gc.ca — and s.80.4 imputed interest benefit — laws-lois.justice.gc.ca.
- Department of Finance, Canada Revenue Agency rates — canada.ca.
Related Insight Accounting CPA resources
- Pillar — Shareholder Loans: CRA Rules 2026 — the full framework for Section 15(2), repayment timing, and interest-benefit planning this rate feeds into.
- Spoke — September 15, 2026 Personal Tax Instalment — the same prescribed rate drives instalment interest; see the companion piece for the three CRA calculation methods.
Important — informational only, not advice. Do not use this article to make any decision.
This article is published by Insight Accounting CPA Professional Corporation for general educational purposes only. It is not tax, legal, accounting, financial, or investment advice, and nothing in this article should be relied upon — by anyone, for any purpose — to make a business, tax, financial, accounting, legal, or investment decision.
Tax law, CRA administrative positions, court interpretations, and Ontario provincial rules change frequently, sometimes retroactively, and the content of this article may be incomplete, simplified, out of date, or wrong by the time you read it. The right answer for your specific situation depends on facts this article does not know — your structure, history, jurisdiction, filings, contracts, and goals.
Before acting, engage your own Chartered Professional Accountant or qualified advisor who has reviewed your specific circumstances in writing. Insight Accounting CPA Professional Corporation, the author, and any contributors expressly disclaim all liability — direct, indirect, or consequential — for any action taken or not taken on the basis of this content.
Insight Accounting CPA Professional Corporation is led by Bader A. Chowdry, CPA, CA, LPA — licensed by CPA Ontario under the Public Accounting Act, 2004. To engage us for situation-specific advice, book a free 30-minute discovery call.
