Family lenders keep asking the same four questions — can I charge interest, how much, is it taxed, and what’s this prescribed rate everyone mentions? This hub holds the answers and the deep-dives behind them.
Curated & reviewed July 3, 2026 · Lend Right Editorial Team · a RULE8 Inc. product
35% APR is the ceiling: the Criminal Code makes it an offence to charge an effective annual rate at or above it, family or not. 3% is the floor that matters for tax planning: the CRA prescribed rate for 2026, the benchmark for spousal loans and other attribution-sensitive arrangements. And 0% is the most popular number of all — interest-free is completely lawful between family members, and it’s what most parents and siblings choose.
Between those numbers sits one obligation lenders forget: interest you receive is taxable income. A 3% loan to a sibling produces a T-slip-less income stream you’re expected to report. The guides below take each rule in depth.
Zero, 3%, or anything lawful — what matters is writing it down.
Create a loan agreement — free →Anything with an effective annual rate below 35% APR — the federal criminal threshold applies to every lender in Canada, related or not. In practice, family loans cluster at 0% or around the CRA prescribed rate.
Yes. Interest you receive is income, reportable even though nobody issues you a slip. Interest-free loans avoid the issue entirely — one reason they're the family default.
3% for 2026. It's set quarterly from Treasury bill yields, and for prescribed-rate loans (notably between spouses), the rate in force when the loan is made stays locked in for the loan's life.
Absolutely — there's no rule requiring interest between individuals, and no tax consequence to the borrower from an interest-free family loan in ordinary situations. The exception is attribution-sensitive planning (like spousal investment loans), where charging the prescribed rate is the whole point.
Lend Right provides self-help document automation and general information, not legal or tax advice; no lawyer-client relationship is created. Court limits and rates change — verify with official sources. For complex situations, consult a licensed lawyer in your province.