Prescribed Rate Family Loan Calculator

Lend a spouse or family trust money at the CRA prescribed rate, and every dollar of return above that rate gets taxed in their hands instead of yours, permanently, without triggering attribution.

Reading This Tool

How To Use This Calculator

Enter the loan amount, the current prescribed rate, and each spouse's marginal tax rate.

The lower-income spouse invests the loan, earns the full return, and pays interest back at the prescribed rate, which is taxable to the lender and deductible to the borrower. The math only works if the investment return actually clears the prescribed rate, below that, there's no spread left to split.

Your Inputs

Loan Amount $500,000

CRA Prescribed Rate 3.0%

Lower-Income Spouse's Expected Investment Return 6.0%

Higher-Income Spouse's Marginal Rate 45.0%

Lower-Income Spouse's Marginal Rate 20.0%

Interest must actually be paid by January 30 of the following year, every year, without exception. Miss one payment and standard spousal attribution rules apply retroactively to that year and every year after.

Annual Family Tax Impact

After-Tax Return, Without This Loan

After-Tax Return, With This Loan

Additional After-Tax Income, Every Year

Where The Investment Return Actually Goes

Kept By Lower-Income Spouse, Low Rate Interest To Higher-Income Spouse, High Rate

Loans set up at a given quarter's prescribed rate keep that rate for the life of the loan, even if the prescribed rate rises later. This does not model loans to a family trust, minor children, or the specific documentation required to withstand CRA scrutiny, all of which need to be done correctly at setup.

Structuring this loan properly the first time?

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