On December 13, 2013 the Canada Revenue Agency announced that the prescribed annual interest rate will be reduced back to 1% for the period from January 1, 2014 to March 31, 2014.
As previously noted in our September 2013 Special Report, the use of family loans at the prescribed rate of interest to split income with family members in lower tax brackets is a popular strategy to reduce the family’s overall tax liability.
This decrease provides another opportunity for taxpayers to lock in at a low rate of 1% on family loans where arrangements are finalized between January 1, 2014 and March 31, 2014.
Contact your Collins Barrow tax advisor to explore this and other valuable tax planning opportunities.
Gina Pak CPA, CA is a Tax Manager in the Toronto office at Collins Barrow.
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