CRA Q4 Interest Rates Rise to 7% on Overdue Taxes and CPP Contributions
The Canada Revenue Agency has raised its prescribed interest rates for October–December 2026. Overdue income tax, Canada Pension Plan contributions, and EI premiums now carry a 7% annual rate, while overpayments to non-corporate taxpayers are set at 5%.
Starting October 1, 2026, the Canada Revenue Agency has implemented new prescribed interest rates for the fourth quarter that apply through December 31. The move reflects CRA's quarterly adjustments and affects anyone with outstanding tax balances or awaiting refunds.
Rates That Matter to Individuals
- Overdue taxes, CPP, and EI premiums: 7% annually
- Non-corporate taxpayer overpayments (refunds): 5% annually
- Corporate overpayments: 3% annually
- Low-interest loan benefits (employee/shareholder): 3% annually
- Corporate loan rate: 6.29%
These rates apply to any amounts owed to the CRA or owed by the CRA under the Income Tax Act and related legislation. If you have a tax debt from a prior year, interest is compounding daily at the new 7% rate from October 1 forward. Conversely, if the CRA owes you a refund, it will accrue interest at 5% (non-corporate) or 3% (corporate) as of October 1.
If you're self-employed or have quarterly tax instalments owing, the 7% rate now applies to any missed or late payments. The rate was 7% in Q3 as well, so there's no change from the previous quarter, but it's a good reminder that tax debt grows quickly.
What this means for expats and newcomers: If you've arrived in Canada this year and owe back taxes from your arrival or during your tax year, or if you're carrying forward a balance, interest is now accruing at 7%. File your return and settle any balance as soon as possible. Similarly, if you're expecting a refund, the CRA will add interest at 5% (or 3% if your income is from a corporation), which is why filing promptly matters.
Sources
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