The Canada Revenue Agency has confirmed that the prescribed rate used for family income-splitting loans and employee or shareholder loan benefits will hold at 3% for the fourth quarter of 2026, effective October 1 through December 31. For advisors with clients weighing a prescribed rate loan this fall, the rate they lock in today is the rate that applies for the life of the structure.
This is the sixth consecutive quarter at 3%. The rate has been cut in half since the start of 2024, when it sat at a cycle peak of 6%, and it has now gone longer without moving than at any point since that decline began.
What the Rate Actually Governs
A prescribed rate loan lets a higher-earning spouse, parent, or family trust lend money to a lower-earning family member at the CRA-set rate, with the investment income taxed in the borrower's hands rather than attributed back to the lender. The structure only works if the loan charges at least the prescribed rate in effect when the loan is made and the interest is actually paid within thirty days of each year-end.
Corporations use the same mechanism for employee and shareholder loans. If a company lends a shareholder money at below the prescribed rate, the shortfall is treated as a taxable benefit to that shareholder.
The Corporate Rate Is Not the Same Rate
CRA calculates a second, higher rate for corporate pertinent loans or indebtedness, the mechanism used mainly for loans between a Canadian corporation and a non-resident affiliate. That rate reached 6.30% in the third quarter of 2026, more than double the 3% family and shareholder rate, and it has been rising even as the family rate held flat.
The two rates are calculated on different formulas from different Treasury bill benchmarks, and mixing them up in a client conversation is a real risk. A family income-splitting loan and a corporate cross-border loan sitting in the same holding structure can be governed by two different rates in the same quarter.
The chart below sets the family and shareholder rate against its own recent history, not against the corporate rate, since the two series move on different scales and different drivers.
Prescribed rates are set quarterly from the average yield on three-month Government of Canada Treasury bills for the first month of the preceding quarter, rounded up to the next whole percentage point. The corporate pertinent-loan rate uses a separate formula and reached 6.30% in the third quarter of 2026.
The Planning Bridge: Why Stability Matters Now
A prescribed rate loan set up this quarter locks in 3% for as long as the loan is outstanding, even if CRA raises the rate in a future quarter. Six straight quarters without a change is itself a form of information: it signals that short-term Treasury bill yields, the input CRA uses to set the rate, have been stable enough that the calculation keeps landing in the same place.
That stability will not last indefinitely. The Bank of Canada delivers its next rate decision Wednesday, and any shift in the government bond market that follows feeds into the Treasury bill yields CRA uses to calculate the rate for the first quarter of 2027. A structure set up now captures the current cycle-low rate before that recalculation happens.
Trusts and corporations with existing income-splitting loans do not need to do anything differently this quarter. The planning conversation belongs to clients who have discussed the structure but not yet executed it, and to anyone with a mixed structure who needs the family and corporate rates kept straight.