CRA Prescribed Rate Drops to 4% in Q2 2026: Spousal Loan Opportunity

Key takeaways

• The CRA prescribed interest rate for Q2 2026 (April–June) is 4%
• The prescribed rate sets the floor for spousal loans used in income-splitting strategies
• Loans made at the prescribed rate in effect at the time are locked in for the life of the loan
• Interest on tax debts owed to the CRA is the prescribed rate plus 4% (currently 8%)
• Interest received from the CRA on refunds is the prescribed rate minus 2% (currently 2%)

The CRA prescribed interest rate is set quarterly based on the average yield of 90-day Government of Canada treasury bills. For Q2 2026, the rate holds at 4% — unchanged from Q1. This rate affects income-splitting loans, tax debt interest, and refund interest.

Spousal loan planning

A spousal or family loan made at or above the prescribed rate in effect when the loan is established can shift investment income from a higher-income to a lower-income spouse. The income is then taxed at the lower-income spouse's marginal rate instead of the higher-income spouse's rate.

The loan must bear interest at exactly the prescribed rate at the date the loan is made. If the prescribed rate rises in future quarters, a loan already in place is not affected — the rate is locked. If you lend at 4% today and the rate rises to 5% next quarter, your 4% loan remains valid indefinitely.

The borrowing spouse must actually pay the interest by January 30 of the following year. Missing this payment causes attribution to apply retroactively for that year. Keep records of every interest payment.

Tax debt and refund interest

If you owe money to the CRA, the interest rate is the prescribed rate plus 4%, currently 8%. Interest compounds daily from the day after the payment was due. At 8% compounding daily, a $10,000 debt grows by about $2.26 per day.

The CRA pays interest on refunds at the prescribed rate minus 2%, which at a 4% prescribed rate is 2%. Refund interest begins 45 days after the later of your filing date or the payment due date. Don't count on CRA interest to compensate for a delayed refund — 2% is well below inflation.