Clients who have implemented a prescribed rate loan should be reminded to pay the appropriate interest relating to the 2024 year on or before January 30, 2025.
Qu’est-ce qu’un prêt à taux prescrit?
- Un prêt à taux prescrit est l’une des rares possibilités de fractionnement du revenu offertes aux Canadiens, qui ne contrevient pas aux diverses « règles d’attribution » de la Loi de l’impôt sur le revenu (Canada).
- Une stratégie de prêt à taux prescrit permet aux Canadiens de prêter légitimement du capital, ainsi que de placer les revenus et les gains découlant du prêt à leur époux ou conjoint de fait ou bien à une fiducie entre vifs, tandis que les bénéficiaires paient de l’impôt à des taux marginaux moindres. Si le prêt est bien structuré, l’unité familiale paiera dans l’ensemble moins d’impôt sur ces revenus et ces gains.
Quand les intérêts sont-ils dus?
- Interest on a prescribed rate loan must be “paid not later than 30 days after the end of the particular year.” As “particular year” in most instances refers to a calendar year, the year-end is December 31. To ensure that any outstanding prescribed rate loans remain valid, the borrower must ensure that the required interest is paid to the lender on or before January 30, 2025.
- The payment of interest is required even if the prescribed rate loan was issued during the year or additional funds were loaned or Where the loan balance has changed in the year (e.g. a payment was made to principal), the interest payable should be prorated based on the number of days in the year that each different balance was outstanding.
Par exemple:
- A $100,000 prescribed rate loan at 5% interest was established on December 1, 2024. The accrued interest for the period December 1 – 31 must be calculated and paid no later than January 30, 2025.
- A $2 million prescribed rate loan at 5% interest was set up on July 1, 2024, half the loan principal ($1 million) was repaid on December 15, 2024. Interest for 2024 will be calculated as 5% on $2 million (July 1 – December 14) plus 5% on $1 million (December 15 – 31). Interest must be paid no later than January 30, 2025.
Comment les intérêts doivent-ils être payés?
- It is best practice for the borrower to pay the required interest from their own separate Using joint chequing or investment accounts to make the interest payments should be avoided. Where a prescribed rate loan is in place between spouses or common-law partners, the borrower often pays the interest from their investment account to the lender’s investment account.
- Les paiements d’intérêts devraient être consignés au cas où l’Agence du revenu du Canada demanderait des preuves. Comme pour les autres renseignements fiscaux justificatifs, il est généralement recommandé de conserver les documents pendant au moins six ans.
Que se passe-t-il si les intérêts ne sont pas payés?
If the interest is not paid on time, then the “attribution rules” will apply and the tax benefits of the prescribed rate loan strategy will be lost. The loan will be considered “tainted”.
Même si un nouveau prêt à taux prescrit peut être établi de façon à récupérer les avantages fiscaux, il peut y avoir plusieurs conséquences négatives lorsque les intérêts ne sont pas payés à temps.
- Professional Fees
Establishing a prescribed rate loan generally comes with professional fees. For example, a lawyer would have to be engaged to draft a new loan agreement to document the new prescribed rate loan.
Additionally, professional fees from accountants and/or tax advisors may also be required.
- Lost Access to Lower Interest Rates
Though they have begun coming down, prescribed rates rose sharply starting mid-2022. The prescribed rate has been set at 4% for the first quarter of 2025.
Given the interest rate is “locked in” at the time a prescribed rate loan is established, missing an interest payment may taint a prescribed rate loan that is locked in at a lower interest rate (many have been established at 1%). Generally, the lower the prescribed rate attached to the loan, the greater the tax benefits.
- Liquidation of Portfolio
Where the prescribed rate loan was used by the borrower to purchase marketable securities, it is generally best practice to liquidate the portfolio, settle the “tainted” prescribed rate loan, establish a new prescribed rate loan and invest. If the original investments are disposed of at a loss and are subsequently repurchased, the superficial loss rules should be considered.
Remarque: Il faut obtenir des conseils fiscaux professionnels si un prêt à taux prescrit est en situation irrégulière à la suite de paiements d’intérêts manqués.
To facilitate payment of interest on your prescribed rate loan and to understand how such loans may be an effective tax mitigating strategy for you and your family, contact your Wellington-Altus advisor.
