The Canada Revenue Agency prescribed rate for loans to family members has been 3% for six consecutive quarters, and the arithmetic points to a seventh. The rate is set from the average yield on three-month Government of Canada treasury bills in the first month of the preceding quarter, rounded up to the next whole percentage point.
Three-month bills yielded 2.40% on October 6, according to Trading Economics. October average would need to climb about 60 basis points, above 3.00%, for the first-quarter 2027 rate to reach 4%. A 25 basis point move by the Bank of Canada on October 28 would not close that gap.
What the Rounding Rule Does to the Year-End Calendar
The absence of a rate cliff changes what the deadline pressure is about. A prescribed rate loan carries the rate in effect on the day it is made for as long as it remains outstanding, provided interest is paid no later than 30 days after each calendar year-end. For a loan made in 2026, the first payment is due January 30, 2027. Missing it triggers the attribution rules for that year and for every year after.
The rate itself is not the reason to rush. The Q4 2026 rate was announced August 28, and the first-quarter rate follows the same pattern of a late-November or early-December announcement, to be confirmed on the CRA prescribed interest rates page. The planning calendar is set by year-end income reporting, the January 30 interest date and the March 1, 2027 deadline for 2026 RRSP contributions, not by a rate reset.
Prescribed rate history shows why the 3% level matters. The rate reached 6% in the first two quarters of 2024 and has since fallen three points.
The prescribed rate has held at 3% since the third quarter of 2025 while the 10-year Government of Canada yield has moved to 3.985%, a spread of roughly one percentage point.
The rate is set each quarter from the average three-month Government of Canada treasury bill yield in the first month of the preceding quarter, rounded up to the next whole percentage point. The dashed line marks the 10-year yield of 3.985% on October 7.
Where the Spread Comes From
A hypothetical $500,000 loan at 3% generates $15,000 of annual interest owed by the borrowing spouse or family trust. The same amount invested at the 10-year yield of 3.985% earns $19,925, a gross spread of $4,925 before tax. The benefit of the structure is that the investment income is taxed in the hands of the lower-income borrower, while the lender reports the $15,000 of interest.
The structure applies to non-registered accounts. TFSA contributions do not need a loan: a gift to a spouse to fund a TFSA contribution is not subject to attribution, and the 2026 TFSA limit is $7,000. A spousal RRSP is the other alternative, with the 2026 RRSP dollar limit at $33,810 and a March 1, 2027 contribution deadline for the 2026 tax year.
Existing Loans Made at 4%, 5% and 6%
Loans made between the first quarter of 2023 and the second quarter of 2025 locked in 4%, 5% or 6%, and those rates stay with the loan. A borrower paying 6% on a loan made in early 2024 is paying twice the current prescribed rate. Some practitioners repay such a loan and replace it with a new loan at the current rate. The repayment must be real, and the sequence belongs with the client tax professional.
For incorporated clients, the 3% taxable benefit rate on low-interest employee and shareholder loans matches the prescribed rate in Q4 2026. The overdue-tax rate sits four points above the prescribed rate by formula, at 7%, so a client carrying unpaid 2026 instalments pays more than twice the family loan rate on that balance.