New Interest Rates: What’s Changed
- For the first calendar quarter of 2026 (January 1 to March 31), the interest rate on overdue taxes, CPP contributions, and EI premiums jumps to 7% annually. (canada.ca)
- Overpayments now earn 3% for corporations, 5% for non-corporate taxpayers. (canada.ca)
- Interest on low or interest-free loans and related shareholder/employee benefits is set at 3%. (canada.ca)
Who This Impacts
- Any taxpayer—individual or business—who is behind in filing or remitting taxes, CPP, or EI will face steeper penalties or interest costs.
- Corporate entities with overpayments will get less interest in return, while non-corporate taxpayers also face modest returns on overpayments.
- Those using shareholder or employee loans need to calculate imputed benefits using the new 3%. If not, CRA could reassess cheaper loans as taxable benefits.
Compliance Steps You Should Take Now
- Pay on time: Avoid carrying over balances past due dates. Even short delays now cost more.
- Track due dates thoroughly, including payroll remittances, instalments, or quarterly filings.
- Check loan arrangements: Ensure market rates, or if preferential rates are used, document interest computations correctly.
- Use refunds wisely: If expecting overpayments, anticipate the limited interest to be earned during this quarter.
Example Calculations
- Individual owes $10,000 overdue as of January 1, 2026: interest at 7% = $700 for the year, roughly $175 per quarter.
- Non-corporate taxpayer with a large refundable payment due: $20,000 overpaid yields $1,000 at 5% annually = $250 per quarter.
- Corporate overpayment of same $20,000 fetches 3% → $600 annually, or $150 per quarter.
Long-Term Implications
- Higher rates encourage more timely filing/payment but increase pressure on cash flow.
- Businesses that often defer payments have increased planning urgency.
- Proper tax planning, leveraging instalments, deferring expenses carefully, becomes more valuable.
Category: Compliance