• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/7/2013

Canada - Lock in family income-splitting loans, employer-provided loans now 

August 7: Individuals in Canada need to consider acting quickly to realize future tax savings before the 1% prescribed interest rate for family income-splitting loans is increased to 2%, effective 1 October 2013.

Taxpayers who take advantage of the current historically low interest rate may provide significant long-term benefits to their families.

The current 1% interest rate (which has remained unchanged since April 2009) is at its lowest possible level, creating an opportunity to enter into income-splitting loan arrangements with family members.

Similarly, employees who have entered into qualifying home purchase loans with their employers may have a unique tax planning opportunity to reduce the related taxable benefit.

To lock in loan arrangements at 1%, individuals will need to finalize all arrangements by 30 September 2013. Also, making a family loan arrangement now can allow for income-splitting tax benefits when interest rates and investment returns exceed 1%.

Read an August 2013 report prepared by the KPMG member firm in Canada: Lock in Family Income-Splitting Loans By September 30

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now