HomeLoansTax debts and the prescribed rate

Tax debts and the prescribed rate

To calculate the rate for the upcoming quarter (Oct. 1 through Dec. 31, 2022), we look at the first month of the current quarter (July) and take the average of the three-month T-Bill yields, which were 2.1962% (July 7, 2022) and 2.6959% (July 21, 2022). That average is 2.44605% and when rounded up to the nearest whole percentage point, we get 3% for the new prescribed rate for the fourth quarter of 2022.

This upcoming increase marks the second time the prescribed rate has gone up since the previous historic low of 1% between July 1, 2020, and June 30, 2022.

In reality, there are actually three prescribed rates: the base rate, the rate paid for tax refunds, and the rate charged for taxes owing. The base rate, which is increasing to 3% on Oct. 1, applies to taxable benefits for employees and shareholders, low-interest loans and other related-party transactions. The rate…

Read more at www.investmentexecutive.com

- Advertisment -

Most Popular