CRA and IRS Interest Rates For Small Business

by L. Kenway BComm CPB Retired

The Bookkeeper's Handy Reference to IRS interest rates for loans to shareholders, installment sales, and underpayment or overpayment of taxes; and CRA prescribed interest rates for shareholder loans, spousal loans as well as employee loans.

Canadian (CRA) Prescribed Interest Rates

Released Quarterly

These are the rates used for amounts owed to CRA. These are also the rates CRA pays when they owe you or your corporation.

Taxable Benefits refers to interest-free and low-interest loans for shareholders, spousal and employees.

Overdue and ovepaid taxes includes income taxes, CPP contributions, EI premiums, GST/HST, Excise tax / duties ... basically any kind of federal tax.

Period	Overdue Taxes	Overpaid Taxes	Taxable Benefits
Apr 1 2023 to Sep 30 2023	9%	5% corporate 7% others	5%
Jan 1 2023 to Mar 31 2023	8%	4% corporate 6% others	4%
Oct 1 2022 to Dec 31 2022	7%	3% corporate 5% others	3%
Jul 1 2022 to Sep 30 2022	6%	2% corporate 4% others	2%
Jul 1 2020 to Jun 30 2022	5%	1% corporate 3% others	1%
Apr 1 2018 to Jun 30 2020	6%	2% corporate 4% others	2%
Jan 1 2014 to Mar 31 2018	5%	1% corporate 3% others	1%
Oct 1 2013 to Dec 31 2013	6%	2% corporate 4% others	2%
Jul 1 2010 to Sep 30 2013	5%	1% corporate 3% others	1%
Apr 1 2009 to Jun 30 2010	5%	3%	1%
Jan 1-Mar 31 2009	6%	4%	2%
Jul 1-Dec 31 2008	7%	5%	3%
Jan 1-Jun 30 2008	8%	6%	4%

While looking for something else, I came across a KN&V CAs (www.knv.com) rate sheet ... and learned something new. Did you know that the overpaid taxes rate (amounts owing from the federal government) is always 2% point more than the taxable benefits rate? ... and that overdue taxes rates (basically the rate for all other purposes) is 4% points more than the taxable benefits rate? I just never noticed before ... scary how unobservant I am at times!

Prescribed Interest Rates
Coporate Taxpayer Loans or Indebtedness

Period	Corporate Loans	Period	Corporate Loans
Jul 1 2023 to Sep 30 2023	8.44%	Apr 1 2023 to Jun 30 2023	8.40%	Jan 1 2023 to Mar 31 2023	8.00%	Oct 1 2022 to Dec 31 2022	6.45%
Jul 1 2022 to Sep 30 2022	5.20%	Apr 1 2022 to Jun 30 2022	4.38%
Jan 1 2022 to Mar 31 2022	4.15%	Oct 1 2021 to Dec 31 2021	4.17%
Jul 1 2021 to Sep 30 2021	4.10%	Apr 1 2021 to Jun 30 2021	4.07%
Jan 1 2021 to Mar 31 2021	4.10%	Oct 1 2020 to Dec 31 2020	4.18%
Jul 1 2020 to Sep 30 2020	4.27%	Apr 1 2020 to Jun 30 2020	5.65%
Jan 1 2020 to Mar 31 2020	5.64%	Oct 1 2019 to Dec 31 2019	5.65%
Jul 1 2019 to Sep 30 2019	5.67%	Apr 1 2019 to Jun 30 2019	5.63%
Jan 1 2019 to Mar 31 2019	5.67%	Oct 1 2018 to Dec 31 2018	5.45%
Jul 1 2018 to Sep 30 2018	5.16%	Apr 1 2018 to Jun 30,2018	5.18%
Jan 1 2018 to Mar 31 2018	4.98%	Oct 1 2017 to Dec 31 2017	4.75%
Jul 1 2017 to Sep 30 2017	4.55%	Apr 1 2017 to Jun 30 2017	4.47%
Jan 1 2017 to Mar 31 2017	4.50%	Oct 1 2016 to Dec 31 2016	4.49%
Apr 1 2016 to Jun 30 2016	4.45%	Jul 1 2016 to Sep 30 2016	4.50%
Oct 1 2015 to Dec 31 2015	4.52%	Jan 1 2016 to Mar 31 2016	4.41%
Apr 1 2015 to Jun 30 2015	4.75%	Jul 1 2015 to Sep 30 2015	4.61%
Oct 1 2014 to Dec 31 2014	4.94%	Jan 1 2015 to Mar 31 2015	4.89%
Apr 1 2014 to Jun 30 2014	4.89%	Jul 1 2014 to Sep 30 2014	4.93%
Oct 1 2013 to Dec 31 2013	5.02%	Jan 1 2014 to Mar 31 2014	4.94%

IRS Prescribed Interest Rates

Source: IRS Newsroom
Released Quarterly - latest release August 2023; and May 22, 2023 respectively
Reference: AFR Revenue Ruling 2023-13; Quarterly Interest Rates Revenue Ruling 2023-11

These are the interest rates used by the IRS when assessing interest amounts. Under payment refers to overdue taxes while over payment refers to or over paid taxes.

There are three categories:

• Taxpayers other than corporations - under and overpayment rate is the federal short-term rate plus 3% points.
• Corporations - underpayment rate is the federal short-term rate plus 3% points and the overpayment rate is the federal short-term rate plus 2% points.
• Large Corporations - underpayment rate is the federal short-term rate plus 5% points and the overpayment rate over $10,000 is the federal short-term rate plus 0.5% points.

Over Payment of Taxes Interest Rates

Period	Non-Corporate	Corporate	Corporate Over $10K
Jan 1 2023- Sep 30 2023	7%	6%	4.5%
Oct 1 2022- Dec 31 2022	6%	5%	3.5%
Jul 1 2022- Sep 30 2022	5%	4%	2.5%
Apr 1 2022- Jun 30 2022	4%	3%	1.5%
Jul 1 2020- Sep 30 2022	3%	2%	0.5%
Jul 1 2019- Jun 30 2020	5%	4%	2.5%
Jan 1 2019- Jun 30 2019	6%	5%	3.5%
Apr 1 2018- Dec 31 2018	5%	4%	2.5%
Apr 1 2016- Mar 31 2018	4%	3%	1.5%
Oct 1 2011- Mar 31 2016	3%	2%	0.5%
Apr 1-Sep 30 2011	4%	3%	1.5%
Jan 1-Mar 31 2011	3%	2%	0.5%
Jul 1-Dec 31 2010	4%	3%	1.5%

Under Payment of Taxes Interest Rates

Period	Non-Corporate	Corporate	Large Corporate
Jan 1-Sep 30 2023	7%	7%	9%
Oct 1-Dec 31 2022	6%	6%	8%
Jul 1-Sep 30 2022	5%	5%	7%
Apr 1-Jun 30 2022	4%	4%	6%
Jul 1 2020- Mar 31 2022	3%	3%	5%
Jan 1 2019- Jun 30 2020	5%	5%	7%
Jan 1-Jun 30 2019	6%	6%	8%
Apr 1-Dec 31 2018	5%	5%	7%
Apr 1 2016- Mar 31 2018	4%	4%	6%
Oct 1 2011- Mar 31 2016	3%	3%	5%
Apr 1-Sep 30 2011	4%	4%	6%
Jan 1-Mar 31 2011	3%	3%	5%
Apr 1-Dec 31 2010	4%	4%	6%

IRS Applicable Federal Rates (AFR)

Source: https://apps.irs.gov/app/picklist/list/federalRates.html

Released Monthly

AFRs are the IRS imputed interest rates. This small business tax information is useful as the rates are used for corporate loans to shareholders. They are also used for installment sales where a customer purchase is extended credit for more than 6 months ... and no interest rate was stated.

Short term is 3 years or less, mid-term is over 3 years up to 9 years, and long-term is over 9 years.

The rates are usually available the 3rd or 4th week of the preceding month.

Historical section 7520 interest rates for 1997 to 2021 can be found on the IRS website under Small Businesses & Self Employed> Section 7520 Interest Rates for Prior Years (www.irs.gov/businesses/small-businesses-self-employed/section-7520-interest-rates-for-prior-years).

The rate history below is for the period January 2018 to January 2019. This gives you an idea what you are looking for. Just a heads up - 2023 rates are more in the 4% to 7% range due to all our economics woes over the past three years. For current year rates please see https://apps.irs.gov/app/picklist/list/federalRates.html .

Short-Term	Annual	Semi   Annual	Quarterly	Monthly
January	2.72%	2.70%	2.69%	2.68%
December	2.76%	2.74%	2.73%	2.72%
November	2.70%	2.68%	2.67%	2.67%
October	2.55%	2.53%	2.52%	2.52%
September	2.51%	2.49%	2.48%	2.48%
August	2.42%	2.41%	2.40%	2.40%
July	2.38%	2.37%	2.36%	2.36%
June	2.34%	2.33%	2.32%	2.32%
May	2.18%	2.17%	2.16%	2.16%
April	2.12%	2.11%	2.10%	2.10%
March	1.96%	1.95%	1.95%	1.94%
February	1.81%	1.80%	1.80%	1.79%
January	1.68%	1.67%	1.67%	1.66%

Mid-Term	Annual	Semi   Annual	Quarterly	Monthly
January	2.89%	2.87%	2.86%	2.85%
December	3.07%	3.05%	3.04%	3.03%
November	3.04%	3.02%	3.01%	3.00%
October	2.83%	2.81%	2.80%	2.79%
September	2.86%	2.84%	2.83%	2.82%
August	2.80%	2.78%	2.77%	2.76%
July	2.87%	2.85%	2.84%	2.83%
June	2.86%	2.84%	2.83%	2.82%
May	2.69%	2.67%	2.66%	2.66%
April	2.12%	2.11%	2.10%	2.10%
March	2.57%	2.55%	2.54%	2.54%
February	2.31%	2.30%	2.29%	2.29%
January	2.18%	2.17%	2.16%	2.16%

Long-Term	Annual	Semi   Annual	Quarterly	Monthly
January	3.15%	3.13%	3.12%	3.11%
December	3.31%	3.28%	3.27%	3.26%
November	3.22%	3.19%	3.18%	3.17%
October	2.99%	2.97%	2.96%	2.95%
September	3.02%	3.00%	2.99%	2.98%
August	2.95%	2.93%	2.92%	2.91%
July	3.06%	3.04%	3.03%	3.02%
June	3.05%	3.03%	3.02%	3.01%
May	2.94%	2.92%	2.91%	2.90%
April	3.04%	3.02%	3.01%	3.00%
March	2.88%	2.86%	2.85%	2.84%
February	2.66%	2.64%	2.63%	2.63%
January	2.59%	2.57%	2.56%	2.56%

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