Hey, Hustlers! If you are a Canadian taxpayer, you might want to pay attention to this news. The Canada Revenue Agency (CRA) has announced the new CRA interest rates for the first quarter of 2023. These rates will apply to your income tax, benefits, penalties, and other amounts owed to or by the CRA. In this article, we will explain what these rates mean for you and how you can avoid paying unnecessary interest to the CRA. Let’s dive in!
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What are the new CRA interest rates?
The CRA updates its interest rates every three months, based on the prescribed interest rates set by the Bank of Canada. The prescribed interest rates are the average of the three-month Treasury Bill yields for the first month of the previous quarter, rounded up to the nearest whole percentage point.
The new CRA interest rates for the first quarter of 2023 are as follows:
| Type of interest | Rate (%) |
| Income tax | 5 |
| Benefits | 3 |
| Overpayments | 3 |
| Corporate tax | 7 |
| Penalties | 7 |
These rates are effective from January 1, 2023, to March 31, 2023. They are the same as the rates for the fourth quarter of 2022, except for the corporate tax rate, which has increased by one percentage point.
How do the new CRA interest rates affect you?
The new CRA interest rates affect you in different ways, depending on whether you owe money to the CRA or the CRA owes money to you.
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If you owe money to the CRA
If you owe money to the CRA, such as income tax, GST/HST, payroll taxes, or penalties, you will have to pay interest on the outstanding balance. The interest is compounded daily, meaning that it is calculated on the principal amount plus the accumulated interest. The interest rate varies depending on the type of tax or penalty you owe. For example, if you owe income tax, the interest rate is 5%, but if you owe a penalty for late filing or late payment, the interest rate is 7%.
To avoid paying interest to the CRA, you should file your tax returns and pay your taxes on time. The deadline for filing your 2022 income tax return is April 30, 2023, and the deadline for paying your 2022 income tax balance is also April 30, 2023. If you are self-employed or have a spouse or common-law partner who is self-employed, the deadline for filing your 2022 income tax return is June 15, 2023, but the deadline for paying your 2022 income tax balance is still April 30, 2023.
If you are unable to pay your taxes in full by the deadline, you can contact the CRA and request a payment arrangement. A payment arrangement is an agreement between you and the CRA that allows you to pay your taxes in instalments over a period of time. The CRA will still charge interest on the unpaid balance, but it may waive or cancel some or all of the penalties if you meet certain conditions.
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If the CRA owes money to you
If the CRA owes money to you, such as a tax refund, a GST/HST credit, a Canada child benefit, or a working income tax benefit, you may be entitled to receive interest on the amount. The interest is compounded daily, meaning that it is calculated on the principal amount plus the accumulated interest. The interest rate is 3% for all types of benefits and refunds.
The CRA will pay you interest if it delays processing your tax return or benefit application beyond a certain timeframe. For example, if you file your 2022 income tax return electronically, the CRA will pay you interest if it does not process your return within two weeks. If you file your 2022 income tax return on paper, the CRA will pay you interest if it does not process your return within eight weeks.
To receive your money faster from the CRA, you should file your tax returns and benefit applications electronically and sign up for direct deposit. Direct deposit is a secure and convenient way to receive your payments directly into your bank account. You can sign up for direct deposit through your My Account on the CRA website, or through your financial institution.
Conclusion
The new CRA interest rates for the first quarter of 2023 are important to know if you are a Canadian taxpayer. They affect how much interest you have to pay or receive on your taxes and benefits. To avoid paying unnecessary interest to the CRA, you should file your tax returns and pay your taxes on time. To receive your money faster from the CRA, you should file your tax returns and benefit applications electronically and sign up for direct deposit.
We hope you found this article helpful and informative. If you have any questions or comments, please feel free to leave them below. And don’t forget to check out our website, HustleHub, for more tips and tricks on how to save money, make money, and live better. Until next time, Hustlers, keep hustling!