Under Section 347 of Criminal Code, it is an offence to enter into an agreement or arrangement to receive interest, or actually receive interest, at an effective rate exceeding 60% annually.
On March 28, 2023, the Government of Canada presented a new budget. As part of the budget the government indicated that it was their intention to introduce changes to the Criminal Code to lower the criminal rate to 35 percent.
There are numerous scams, often directed at the elderly which are fraudulent in nature but just fall below the 60% interest rate.
Hopefully, this reduction will help, but, as always, I’m sure the criminals will find another way.
Brian Madigan LL.B., Broker
Can you please give a “for instance or example”?
The Criminal Code for years had the criminal interest rate set at 60%.
This will now be reduced to 35% with the current budget.
So, if someone borrowed $100,000, then the most they would pay back in one year by way of interest woulkd be $34,999.
Naturally, they could repay the entire $100,000 loan.
Interest would include any set up charges, arranging fees, referral fees etc.
The moment it becomes $35,000, then the matter has become criminal.
The mortgagee has coducted a criminal activity and could be prosecuted for a crime.
No interest whatsoever would be payable.
The amount is reduced to 0% interest.