You can charge a sibling in Ontario any rate under 35% APR — the Criminal Code ceiling — and the federal Interest Act says the rate must be expressed as an annual rate or your recovery is capped at 5% a year. Most families choose 0% or something near the CRA prescribed rate; whatever you pick, state it per annum, in writing.
"How much can I charge?" has two answers, and they're miles apart. There's the legal maximum — which is far higher than you'd ever use — and there's the amount that makes sense between siblings, which is usually close to nothing. This guide covers both, with a worked Ontario example, the one rule about how you write the rate, and the single tax scenario that changes everything.
The legal answer and the sensible answer are very different numbers. Legally, you can charge a sibling in Ontario anything up to just under 35% APR. Sensibly, most people land between 0% and a low single-digit rate. This guide is really about the gap between those two — and how to write whatever you choose so it actually holds.
The legal ceiling: 35% APR
Ontario doesn't set its own family-loan interest cap; the limit is federal. Section 347 of the Criminal Code makes it an offence to charge an individual more than 35% APR (a ceiling lowered from the old 60% rate at the start of 2025). For a loan to your brother of $10,000 or less, that 35% line is the hard maximum. It exists to stop predatory lending — which is to say, it's nowhere near anything you'd charge family. Treat it as a fence you'll never walk up to, not a target.
How to write the rate so it counts
One technical rule decides whether your interest is fully collectible: it must be written as a rate per year. The federal Interest Act says that if a contract states interest without an annual rate, no more than 5% per year is recoverable. So "1% a month" with no annual equivalent can shrink to 5% annually in a dispute. Write "X% per annum" and the trap disappears.
So how much should you actually charge a brother?
Here's the part the law can't answer. For a sibling loan, the realistic range is zero to a modest rate that roughly offsets inflation or what the money would have earned sitting in a savings account. A worked example makes it concrete:
Seeing the numbers side by side usually settles the question: a small rate is a gesture, not a windfall, and the legal maximum is irrelevant to anyone lending to a brother. Many people split the difference — charge a token rate to mark it as a genuine loan, then forgive the interest if repayment goes smoothly.
The tax wrinkle: the CRA prescribed rate
One scenario changes the math. If you're lending to your brother specifically so he can invest the money, and you want the investment income taxed in his (lower) hands rather than yours, you've entered income-splitting territory. There, the CRA requires you to charge at least the prescribed rate — 3% as of mid-2026 — and to have him pay that interest by January 30 each year, or the income gets attributed back to you. For an ordinary "help him out" loan, this never comes up; it only matters when investment income and tax planning are the point.
Common questions
How much interest can I legally charge my brother in Ontario?
Anything from zero up to just under 35% APR. That ceiling comes from section 347 of the Criminal Code and applies across Canada, including Ontario. In practice almost no family loan goes near it — the legal maximum and the sensible amount are worlds apart. Most siblings charge nothing, or a modest rate to keep pace with inflation.
Is there a rule about how I write the rate?
Yes. Under the federal Interest Act the rate must be expressed as a rate per year. If you write it per month with no annual figure, recovery can be capped at 5% per year. Stating '5% per annum' avoids that entirely.
Should I charge my brother interest at all?
It's a judgment call, not a legal duty. A small rate can make the loan feel real and create a clean record; charging nothing keeps things simple and avoids tax reporting. What matters most is writing down whatever you decide — including 'interest-free' — so there's no ambiguity later.
Does charging interest create a tax issue between siblings?
If you charge interest, that interest is taxable income to you and should be reported. A separate rule — the CRA prescribed rate, 3% in mid-2026 — only bites if you're lending so your brother can invest and you're trying to split investment income; for a plain personal loan it doesn't apply.
Lock the rate into a real agreement
LendRight writes your chosen rate as a lawful annual figure with the total repayable spelled out, signed by both of you in minutes. Free to draft.
Create my loan agreement →General information for Ontario and Canada, not legal or tax advice; LendRight is not a law firm. The 35% APR ceiling is set under s. 347 of the Criminal Code; the CRA prescribed rate changes quarterly. Confirm current figures before relying on them.
We write plain-language guides on lending between family and friends in Canada, reviewed against current provincial and CRA rules. LendRight is not a law firm — this is general information, not legal advice.