The CRA prescribed rate for family loans is 3% for the fourth quarter of 2026, the sixth consecutive quarter at that level, according to the agency announcement of August 28. The rate for the first quarter of 2027 has not been published, but the formula that produces it is public and its main input is arriving now.
The base prescribed rate is the average yield on 90-day Government of Canada Treasury bills from the first month of the preceding quarter, rounded up to the nearest whole percentage. For the first quarter of 2027, that month is October 2026. Trading Economics shows the Canada 3-month bill yield at 2.40% on October 6, up 0.09 percentage points over the past month. For the rate to rise to 4%, the October average would have to exceed 3.00%, a rise of more than 60 basis points from the current level. A fall below 2.00% would be needed to cut it to 2%.
What a Prescribed Rate Loan Locks In
Under subsection 74.5(2) of the Income Tax Act, a loan to a spouse, common-law partner or family trust that carries interest at the prescribed rate in effect on the day the loan is made keeps that rate for as long as the loan is outstanding. The borrower invests the proceeds in a non-registered account, and income earned above the interest cost is taxed to the borrower rather than the lender. That matters when the two spouses sit in different tax brackets.
The rate on the day of the loan, not the rate today, is what counts. A loan made in the first or second quarter of 2024 carries 6% for its life. The same loan made before December 31, 2026 carries 3%.
The prescribed rate climbed from 1% in early 2022 to 6% in the first half of 2024 and has since fallen to 3%, where it has held for six quarters.
The base prescribed rate is the average 90-day Government of Canada Treasury bill yield from the first month of the preceding quarter, rounded up to the nearest whole percentage. The dashed line marks the Canada 3-month bill yield of 2.40% on October 6.
The January 30 Payment Is the Real Deadline
Interest on each loan for 2026 must be paid by January 30, 2027. That date is a Saturday, so payment by Friday, January 29 removes any dispute about timing. A missed payment brings the income back to the lender for that year and every later year, which ends the planning benefit permanently. The interest must also come from money the borrower owns, not from money the lender has gifted for the purpose.
On a $500,000 loan, interest at 3% is $15,000 a year and interest at 6% is $30,000. The $15,000 difference is the cost of a loan set during the 2024 peak. Replacing it with a 3% loan requires actually repaying the original, and selling investments to raise the cash can trigger capital gains in the borrower account. The comparison needs a tax calculation before it becomes a plan.
Other Rates and Limits Behind the Planning Window
The same announcement holds the employee and shareholder low-interest loan benefit rate at 3%, which applies to shareholders of Canadian-controlled private corporations who borrow from the company. The rate on overdue tax is 7%, four percentage points above the prescribed rate, while the CRA pays 5% to individuals on overpayments and 3% to corporations. The next personal instalment is due December 15, 2026.
The 2026 RRSP dollar limit is $33,810, and contributions made by March 1, 2027 count for the 2026 tax year. The 2026 TFSA limit is $7,000, bringing cumulative room to $109,000 for a person eligible since 2009. Separately, the CRA has deferred enforcement of GST/HST on mutual fund trailing commissions from July 1, 2026 to January 1, 2028, according to Notice 344 as revised on May 26, 2026.