For the first time since the 2nd quarter of 2009 the CRA has increased the prescribed interest rates that it charges on overdue balances and pays out on overpaid remittances. These prescribes rates are determined on a quarterly basis and based upon a simple average of three month T-bills.
The new rates are as follows:
Charged on overdue remittances – 6% (up from 5%)
Paid on overpaid remittances (Corporations) – 2% (up from 1%)
Paid on overpaid remittances (Individuals) – 4% (up from 3%)
Those who are behind or late on their various tax remittances (Income, GST, Payroll, CPP, etc.) will now be charged 6% on their outstanding taxes. Although I recommend staying up to date with your taxes, this is not an unreasonable rate on overdue amounts.
For corporations that have over remitted their various tax payments the CRA will pay interest on these amounts at a 2% annual rate. This rate seems fair considering this is likely higher then what interest could be earned from a bank, term deposit, or similar account.
For individuals that have over remitted their various tax payments the CRA will pay interest on these amounts at a 4% annual rate. This rate is quite generous considering this is likely significantly higher then what interest could be earned on a bank, term deposit, or similar account.
Current information on prescribed rates can be found at http://www.cra-arc.gc.ca/interestrates/
Although it is always the goal to be remitting the correct amount of tax, it is useful to know the consequences of over/under remitting. If you have any questions related to prescribed rates or if you want the peace of mind having a chartered accountant complete your tax return for you please contact us at firstname.lastname@example.org , 604 510-0156, or visit our website at http://www.wattsca.ca for more information.
Disclaimer: The information in the blog is for general information only and is not intended to be a substitute for professional advice. Each person’s situation is unique, and a designated professional accountant can assist you in using the information on this blog to your best advantage. The author of this blog strives, but does not guarantee, to provide information which is current and accurate. Due to the nature of the information, it should not be relied upon for decision making without talking to a designated professional accountant. By obtaining information from this blog, you fully release Watts Advisors Ltd., Charter of any liability that may arise from using this information.