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
Apr 1 – Jun 30
Jul 1 – Sep 30
Oct 1 – Dec 31 |
2009
2%
1%
1%
1% |
|
Example – 2009 Benefit Amount
Home purchase loan of $100,000 advanced to employee on July 1, 2008 when the prescribed interest rate was 3%. No interest is charged by the employer. Repayments of $10,000 are due on July 1st of each year.
| $100,000 X 2% X 90/365 |
|
|
$493 |
| $100,000 X 1% X 91/365 |
|
|
$249 |
| $ 90,000 X 1% X 92/365 |
|
|
$227 |
| $ 90,000 X 1% X 92/365 |
|
|
$227 |
|
|
|
|
|
Total Benefit
(Federal and Quebec) |
|
|
$1196 |