The CRA's prescribed interest rate will hold at 3% for the third quarter of 2026, unchanged for a fifth consecutive quarter and the longest the rate has sat still since it spent two full years at 1% through 2020 and 2021. For advisors running prescribed rate loan strategies with clients, that stability is the whole story.
The prescribed rate is set quarterly from the average yield on three month Government of Canada Treasury bills in the first month of the preceding quarter, rounded up to the nearest whole point. It has moved in most quarters going back to 2022. Five quarters without a change is the exception, not the norm.
Why a Stable Rate Is More Valuable Than a Low One
A prescribed rate loan lets a higher income spouse or family member lend money to a lower income spouse, adult child, or family trust at the prescribed rate in effect when the loan is advanced. The borrower invests the funds and pays tax on the investment income at their own, lower marginal rate. The rate locks in for the life of the loan. It does not reset when the CRA's quarterly rate moves.
That locking mechanism is what makes the current stretch unusual. In a period where the rate is jumping every quarter, families face a timing decision on top of a planning decision: lock in now, or wait for a lower print next quarter. Five straight quarters at 3% removes that timing pressure. The number is not going to surprise anyone before the loan is set up, which means the conversation can focus entirely on structure and amount.
Why the Fall Budget Changes the Calculation
The Department of Finance opened pre-Budget 2026 consultations on July 6, with Minister François-Philippe Champagne inviting input ahead of a budget expected this fall. No tabling date has been set. Last year's budget was tabled November 4.
The relevant precedent is not what the 2026 budget will contain, which is unknowable from a consultation announcement. It is how long a proposal can hang over planning even when it never becomes law. The 2024 capital gains inclusion rate increase was announced in the April 2024 budget, deferred to a new 2026 effective date in January 2025, and cancelled outright in March 2025, a nine month span in which advisors fielded client questions, the CRA administered a rate that was later reversed, and no actual legislative change occurred. A prescribed rate loan set up and documented before the fall budget removes it from that category of uncertainty entirely. The rate is locked at inception regardless of what a future budget proposes.
The prescribed rate's path since 2022 shows a rapid climb followed by an equally steady descent, and the current five quarter plateau at 3% stands out against that more volatile recent history.
The rate climbed from a pandemic-era floor of 1% to a peak of 6% in early 2024 before easing back to 3%, where it has now held for five consecutive quarters. Corporate pertinent loan rates follow a separate, higher schedule.
Where This Strategy Fits, and Where It Does Not
Prescribed rate loans apply to non-registered, taxable investment accounts. They have no relevance to RRSP or TFSA holdings, since income inside those accounts is already sheltered or tax-free regardless of who nominally owns the funds. The strategy is built for a specific segment: a higher income spouse or parent with non-registered investable assets, and a lower income spouse, adult child, or family trust that can hold and invest borrowed funds independently.
It is also worth distinguishing from corporate shareholder loans. The prescribed rate used for family income splitting is separate from the rate for corporate taxpayers' pertinent loans or indebtedness, which sits at 6.3% for the third quarter, more than double the family rate. A CCPC owner asking about borrowing from their corporation at a favourable rate is asking a different question than the one this strategy answers, and the two should not be conflated in a client conversation.