The Canada Revenue Agency confirmed the prescribed interest rate for the fourth quarter of 2026, covering October 1 through December 31, will stay at 3%. This is the sixth consecutive quarter at that level, a run that began in the third quarter of 2025. Before that stretch started, the rate had not been as low as 3% since the fourth quarter of 2022.
What the Rate Actually Governs
The prescribed rate sets the minimum interest a family income-splitting loan must charge to avoid the attribution rules that would otherwise tax investment income back to the higher-earning spouse. A higher-income spouse lends money to a lower-income spouse, a family trust, or an adult child at the prescribed rate; the borrower invests it; investment income above the loan's interest cost is taxed in the lower-income hands. The mechanism also sets the taxable benefit calculation on below-market employee and shareholder loans, and the rate the CRA itself pays on non-corporate tax refunds.
The rate that matters for an existing loan is the one in effect on the day the funds were advanced. It does not reset with each quarterly announcement. A loan set up in any quarter since Q3 2025 is locked at 3% for as long as the loan remains outstanding, even if a future CRA announcement raises the prescribed rate to 4% or 5%.
The Planning Bridge: What a Two-Year Window Is Worth
Corporation and trust accounts benefit most directly, since prescribed rate loans are the standard mechanism for splitting investment income with a lower-taxed family member without triggering attribution. Retiree accumulators with a lower-income spouse are the second most common candidate. Unincorporated business owners with adult children in a lower bracket are a third.
The planning bridge is arithmetic, not opinion: at 3%, the interest cost of preserving a family loan's attribution protection is fixed and small relative to the investment return the borrowing spouse is expected to generate. That gap is what makes the strategy work, and it holds regardless of loan size.
What advisors are systematically missing in the prescribed rate conversation, per the chart introduced next, is how loan size changes the annual cash commitment required to keep the arrangement compliant, since the January 30 interest-payment deadline applies in cash terms, not as a bookkeeping entry.
Annual interest is a fixed cash obligation at the rate in effect when the loan was advanced, due by January 30 of the following year regardless of the investment return the borrowed funds actually generate. Source: CRA prescribed rate announcement, Q4 2026.
The Deadline That Voids the Strategy
The interest payment must be made in cash, not accrued or offset, by January 30 of the year following the loan. Missing this date does not just cost a year of the strategy. It permanently voids the loan's attribution protection for its entire remaining life, which means a $1 million loan set up in 2023 that misses one January 30 payment loses its protection retroactively and for good.
Separately, the CRA stopped accepting Disability Tax Credit certificates submitted on Form T2201 versions dated before 2023, effective September 8. This affects new and reapplying DTC claimants only; clients already approved are unaffected unless they need to file again. Eligible claimants may also now receive a $150 supplemental payment toward certification costs through the Canada Disability Benefit program, beginning this month.