How to potentially save thousands on your tax bill ahead of CRA's prescribed interest rate hike

Here’s what you need to know about income splitting, the prescribed rate and how to take advantage of an exception to the attribution rules to lower your family’s annual tax bill on investment income.Income splitting transfers income from a high-income family member to a lower-income family member. Since our tax system has graduated tax brackets, the overall tax paid by the family may be reduced if the income is taxed in a lower-income earner’s hands.

If the loan is made at the prescribed rate of one per cent before July 1, 2022, the net effect will generally have any investment return generated above one per cent taxed in the hands of the lower-income family member. Note that even though the prescribed rate varies by quarter, you need only use the prescribed rate in effect at the time the loan was originally extended.

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How to potentially save thousands on your tax bill ahead of CRA's prescribed interest rate hikeThe CRA\u0027s prescribed interest rate is about to double. Here\u0027s how you can lock in the current rate and potentially save thousands.
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