Open ProvincesPrescribed-Rate Loans Between Spouses: Conditions and Recordkeeping
A prescribed-rate loan is a technical attribution-rule strategy, not a simple transfer of investments. The written loan, interest payment and timing must meet tax requirements.
Adapted from a guide first written for Quebec readers: passages specific to Quebec were removed. Rules in your province may differ.
Start with the facts that change the answer
Income attribution rules may apply when property or funds are transferred to a spouse or related person. A properly structured loan at an applicable prescribed rate can change the analysis, but the rate, documentation, actual transfer and timely interest payment all matter. A bookkeeping entry or informal promise to pay interest later may not satisfy the rules.
Document your next step
Before transferring funds, obtain a written agreement and professional advice on the current rate and repayment terms. Keep bank records showing the loan and investments, track income and expenses, and pay interest by the applicable deadline each year. Recalculate the strategy if the prescribed rate changes. Compare expected tax savings with legal, accounting and investment costs; do not borrow or invest beyond your risk capacity.
Sources and limits
Source: CRA: income attribution rules. This advanced strategy depends on current attribution rules and precise compliance; obtain individualized tax advice before transferring assets.
General information based on federal and national rules; provincial rules may differ. Confirm with the official body before acting.