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

OTTAWA, September 8, 1997...Revenue Canada today announced that the prescribed interest rate on income tax refunds and overpayments for the fourth calendar quarter will be 6%, while the rate on overdue income taxes and other arrears will be 8%. These rates will be in effect from October 1 to December 31, 1997.

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 October 1 to December 31, 1997, the prescribed rate that applies to taxable benefits for employees and shareholders from interest-free and low-interest loans will be 4%.

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44T/97