Rules of Application
- A loan for the employee to acquire a dwelling.
- Loan obtained by virtue of employment.
- If the term of repayment for the home purchase loan is more than five years, the balance owing at the end of five years is considered a new loan for the purposes of computing the benefit.
Computation of Benefit
- Outstanding loan x prescribed interest rate = taxable benefit.
- Reduce by any amount paid by the employee.
- The prescribed interest rate cannot exceed the interest rate at the time the loan originated.
- Prescribed interest rates:
- Jan 1 – Mar 31 5%
- Apr 1 – Jun 30 5%
- Jul 1 – Sep 30 5%
- Oct 1 – Dec 31 5%
Example – 2007 Benefit Amount
Home purchase loan of $100,000 advanced to employee on July 1, 2006 when the prescribed interest rate was 4%. No interest is charged by the employer. Repayments of $10,000 are due on July 1st of each year.
| $100,000 X 4% X 90/365 |
|
|
$986 |
| $100,000 X 4% X 91/365 |
|
|
$998 |
| $ 90,000 X 4% X 92/365 |
|
|
$907 |
| $ 90,000 X 4% X 92/365 |
|
|
$908 |
|
|
|
|
|
Total Benefit
(Federal and Quebec) |
|
|
$3,799 |