Search Book

Contents

 

About This FAM

Responsible Agency: Office of the Comptroller General
Issued: Aug 1990
Last Updated: Aug 1990

1. Introduction

This directive provides a framework within which interest may be charged pursuant to regulation 9913 (Interest Rate Regulations) and subsection 17(1) of the Financial Administration Act. Subsection 17(1) states:

Subject to the Income Tax Act, the Board may direct that interest be charged at a prescribed rate on any late payment made in connection with a debt owed to the Government.

Regulation 9913 states the interest rate to be used in determining the interest to be charged.

 

2. Policy

Except where another agreement, enactment or contract specifically provides for payment of interest to the Government, interest shall be charged on all monies owed to the Government for taxes levied and for the goods or services provided.
 

3. Directives

3.1 Charging of Interest
3.1.1

Interest must not be charged on monies owing to the Government:

  1. from one department to another department;
  2. due from public agencies;
  3. established through assistance programs;
  4. where there has been a pre-arranged payment schedule negotiated prior to the original implementation of this interest directive;
  5. under a judgement;
  6. for accountable advances;
  7. accounts which have been identified as doubtful for collection by the Manager, Credit and Collections, Financial Management Board Secretariat;
  8. where the amount of interest receivable is less than $50, except for interest receivable on taxes levied under the Tobacco Tax Act;
  9. from bankrupts; or
  10. where the obligation results from invoices improperly prepared or addressed.
3.1.2 Interest may be charged on monies owing to the Government due from the Federal or Provincial governments as determined by a Minister or his or her delegate on an item by item basis.
3.2 All charges for interest must be recorded separately in the accounts receivable records and identified by individual amounts owing by each debtor.
3.3 The debtor shall be advised of all interest charged to his account either by separate invoice or through regular monthly statement of account.
3.4 All payments received for interest charged must be deposited to the consolidated revenue fund in accordance with procedures issued by the Comptroller General.
3.5 Unless another enactment provides otherwise, interest received must be credited to the Department of Finance interest revenue code.
3.6 Calculation of Interest
3.6.1 Government invoices become due on the due date stated on the invoice.
3.6.2 For Government invoices interest is charged commencing 30 calendar days after the due date on the invoice. (The 30 day tolerance, along with the $50 dollar limit stated in 3.1 i), reduce administrative costs and trivial billings.)
3.6.3 Interest on Government loans, except for interest on small business and student loans, becomes due on the first day following the date a payment on the loan is due.
3.6.4

Interest must be calculated on monies recorded as owed to the Government before April 1, 1989:

  1. on a simple interest basis and compounded on March 31 of every year; and
  2. using the lending rate schedule in Appendix A.
3.6.5 Interest must be calculated on monies recorded as owed to the Government on or after April 1, 1989 in accordance with the Interest Rate Regulations, reproduced as Directive 9913 in this manual.
 
 

Appendix A

The following schedule provides the rate that must be used in calculating the interest on overdue payments owed to and owed by the Government (Interest on money owed by the Government is covered by directive 803-4):

Rates Period
May 1, 1984 to July 31, 1984 11.50%
August 1, 1984 to October 31, 1984 13.50%
November 1, 1984 to January 31, 1985 12.50%
February 1, 1985 to April 30, 1985 11.00%
May 1, 1985 to July 31, 1985 10.75%
August 1, 1985 to October 31, 1985 10.50%
November 1, 1985 to January 31, 1986 10.00%
February 1, 1986 to April 30, 1986 11.50%
May 1, 1986 to July 31, 1986 11.25%
August 1, 1986 to October 31, 1986 9.75%
November 1, 1986 to January 31, 1987 9.75%
February 1, 1987 to April 30, 1987 9.25%
May 1, 1987  to July 31, 1987 9.25%
August 1, 1987 to October 31, 1987 10.00%
November 1, 1987 to January 31, 1988 9.75%
February 1, 1988 to April 30, 1988 9.75%
May 1, 1988 to July 31, 1988 10.25%
August 1, 1988 to October 31, 1988 10.75%
November 1, 1988 to January 31, 1989 11.75%
February 1, 1989 to March 31, 1989 12.25%
April 1, 1989 to indeterminate 18.00%