Due to increases in the Treasury Bill rates, these rates are expected to go to 6% and 2% respectively, starting April 1, 2018.
There’s not much you can do about the increase in the rate on late payments. If you have a tax bill owing to the CRA that you can’t pay, you’ll have to live with paying the higher rate. (And note that interest you pay to the CRA on overdue income tax amounts is non-deductible.)
However, the increase in the prescribed rate for family loans might encourage you to take some action, before April 1, 2018.
Loans to family members can be a useful method of income splitting. Suppose you have a high income and your spouse has a low income. You’re paying tax at, say, 53% on each additional dollar earned, and your spouse is paying, say, 21%. (The rates vary by province and tax bracket, and the brackets increase each year for inflation.)
If you simply give money to your spouse to invest, the income on that money will be “attributed” back to you under the Income Tax Act’s attribution rules, so you’ll pay tax on the income at your high rate.
However, if you lend money to your spouse, then there is no attribution as long as your spouse pays you interest at the prescribed rate by January 30 each year for the previous year. And for this purpose, the prescribed rate is the rate at the time the loan was made, and this can continue forever.