Interest rates on overdue and overpaid income taxes set for the third calendar quarter

OTTAWA, June 12, 1996... Revenue Canada today announced that due to an administrative error, the news release issued June 4, 1996, listed incorrect rates of interest for the third calendar quarter.

The correct prescribed rate of interest for income tax refunds and overpayments for the third calendar quarter is 7%. The correct rate on overdue income taxes and other arrears is 9%. These rates will be in effect from July 1 to September 30, 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 Employment Insurance premiums.

From July 1 to September 30, 1996, the correct prescribed rate that applies to taxable benefits for employees and shareholders from interest-free and low-interest loans is 5%.

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OTTAWA, June 4, 1996... Revenue Canada today announced that the prescribed interest rate on income tax refunds and overpayments for the third calendar quarter will remain at 8%, while the rate on overdue income taxes and other arrears will also remain at 10%. These rates will be in effect from July 1 to September 30, 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 July 1 to September 30, 1996, the prescribed rate that applies to taxable benefits for employees and shareholders from interest-free and low-interest loans will remain 6%.

For media information

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