INTEREST RATES ON OVERDUE AND OVERPAID INCOME TAXES SET FOR THE FIRST CALENDAR QUARTER

OTTAWA, December 21, 1995... Revenue Canada today announced that the prescribed interest rate on income tax refunds and overpayments for the first calendar quarter will remain at 9%, while the rate on overdue income taxes and other arrears will also remain at 11%. These rates will be in effect from January 1 to March 31, 1996.

The Department calculates the prescribed rates for a calendar quarter by establishing the average rate on 90-day Treasury bills sold during the first month of the preceding quarter. This figure is rounded up to the nearest percentage point.

Then, to determine the interest rate for all refunds and overpayments, the Department adds two percentage points to that figure. It adds four percentage points to determine the rate for all overdue taxes, penalties, interests, insufficient instalment payments, and unpaid employee tax deductions. This rate also applies to unpaid Canada Pension Plan contributions and Unemployment Insurance premiums.

From January 1 to March 31, 1996, the prescribed rate that applies to taxable benefits for employees and shareholders from interest-free and low-interest loans will remain 7%.

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72T/95