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Will interest accumulate on my CRA loan during my payment plan?

October 09, 2023

Yes, interest will accumulate on payment plan balances regardless of the structure or frequency of your arrangement. The CRA charges interest on any balance outstanding that is not paid by the specified filing payment date. Any amounts under dispute will also continue accumulating interest.  

As of October 1, 2022, the interest charged by CRA on overdue taxes will be 7%, compounded daily. Interest rates are revised every three months in accordance with the prescribed interest rate which is based on the average rate of three-month treasury bills sold during the first month of the previous quarter. The 2022 CRA interest rates on overdue remittances can be found below:

  • Q1 2022: 5%
  • Q2 2022: 5%
  • Q3 2022: 6%
  • Q4 2022: 7%

Typically, the CRA charges higher interest rates than most traditional lenders. For this reason alone, it’s often advised, even by the CRA themselves, to borrow funds to pay off your balance. By doing so you will not only get a better rate but receive more favourable payment terms from both an interest perspective and the amount of time afforded to pay back the borrowed balance as opposed to the stricter conditions of the CRA. The ability to borrow should be given serious consideration when exploring options available for dealing with CRA debts.