Interest and Administrative Charges Regulations

SOR/96-188FINANCIAL ADMINISTRATION ACT
Registration 1996-04-01
Regulations Respecting Interest on Overdue Accounts and Administrative Charges for Dishonoured Instruments
T.B. 823947 1996-03-28The Treasury Board, pursuant to subsection 155.1(6)Footnote * of the Financial Administration Act, hereby makes the annexed Regulations respecting interest on overdue accounts and administrative charges for dishonoured instruments, effective April 1, 1996.
Return to footnote *S.C. 1991, c. 24, s. 45Short Title

1 These Regulations may be cited as the Interest and Administrative Charges Regulations.

Interpretation

2 In these Regulations,

Act
Act means the Financial Administration Act; (Loi)
average bank rate
average bank rate means the weighted arithmetic average of the bank rates that are established during the month before the month in respect of which interest is being calculated; (taux d’escompte moyen)
bank rate
bank rate means the rate of interest established periodically by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to members of the Canadian Payments Association; (taux d’escompte)
concessionary loan
concessionary loan means a loan bearing no interest or a rate of interest that is three or more percentage points below the average cost of borrowing of the Government of Canada on the day the loan agreement is entered into; (prêt assorti de conditions privilégiées)
demand for payment
demand for payment means a demand for payment in writing and includes an invoice, bill, statement and assessment; (demande de paiement)
due date

due date means, in relation to an amount owing to Her Majesty

(a) for the provision of goods or services or the use of facilities,

(i) the due date specified in a demand for payment for, or included in the terms and conditions of, the provision of the goods or services or the use of the facilities, as the case may be, or
(ii) where no date has been specified or included as indicated in subparagraph (i), the day that is 30 days after the day on which a demand for payment is issued,

(b) with respect to a repayable contribution,

(i) every day on which a scheduled repayment is to be made in accordance with the terms and conditions of the contribution, or
(ii) where no repayment schedule for the contribution has been specified, the day that is 30 days after the day on which a demand for payment is issued,

(c) with respect to the recovery of an overpayment or erroneous payment,

(i) every day on which a scheduled repayment is to be made, or
(ii) where no repayment schedule has been arranged, the day that is 30 days after the day on which a demand for payment is issued,

(d) with respect to a licence, lease, loan, including a hypothecary loan, or a mortgage, every day on which a payment is to be made in accordance with the licence, lease, loan or mortgage agreement,
(e) with respect to an accountable advance, the day on which repayment of any balance owing to Her Majesty is to be made in accordance with the Accountable Advances Regulations, and

(f) for any other reason,

(i) any day on which payment is to be made in accordance with the applicable Act of Parliament, regulation, order, contract or arrangement, or
(ii) where a day referred to in subparagraph (i) cannot be determined, the day that is 30 days after the day on which a demand for payment is issued; (date d’échéance)

financial institution
financial institution means an institution, corporation or other entity, incorporated, continued or formed by or under an Act of Parliament or the legislature of a province or the laws of a foreign state or political subdivision thereof, that holds deposits and honours cheques and other payment instructions on behalf of its clients and includes a bank, a trust company and a cooperative credit society; (institution financière)
in writing
in writing includes in any electronic form that is capable of being reproduced in intelligible, written form within a reasonable time; (par écrit)
pre-authorized debit
pre-authorized debit means a debit to a debtor’s credit card account or other account with a financial institution that is initiated by the creditor, in accordance with a prior authorization given by the debtor to the creditor. (prélèvement automatique)

SOR/99-30, s. 1.

Application

3 These Regulations do not apply to

(a) amounts owed to a Crown corporation; or
(b) amounts owing by a department.

PART I Interest

Application

4 This Part does not apply to

(a) capital market transactions and, except as provided in section 7, interest-bearing loans, including hypothecary loans, or mortgages;
(b) amounts owing to Her Majesty pursuant to the Income Tax Act, or any Act of Parliament that imposes a tax or duty; or
(c) amounts referred to in any other Act of Parliament or regulation, or any order, contract or arrangement, that provides for the charging of interest on those amounts.

Rate of Interest

5 (1) For the purpose of subsection 155.1(1) of the Act and subject to sections 6 to 8, in all cases where an amount is owing to Her Majesty, interest calculated and compounded monthly at the average bank rate plus 3% is payable on that amount and accrues during the period beginning on the due date and ending on the day before the day on which payment is received by Her Majesty or an agent of Her Majesty.
(2) If a partial payment is made, the period for which interest is payable in respect of the amount paid ends on the day before the day on which the partial payment is received by Her Majesty or an agent of Her Majesty.

SOR/99-30, s. 2.

Overpayments and Erroneous Payments

6 (1) If a person has received an overpayment or erroneous payment, interest is payable by the person on any amount that is not repaid by its due date and accrues as specified in section 5, during the period beginning on the due date and ending on the day before the day on which repayment is received by Her Majesty or an agent of Her Majesty.
(2) If a person has received an overpayment or erroneous payment as a result of fraud, falsification of documents, wilful misrepresentation or any other offence committed by that person or by any other person acting on behalf of that person, unless provided otherwise by an order of a court, interest is payable by that person on the amount owing on account of the overpayment or erroneous payment and accrues as specified in section 5, during the period beginning on the day on which the overpayment or erroneous payment is made and ending on the day before the day on which repayment is received by Her Majesty or an agent of Her Majesty.
(3) Nothing in subsection (1) shall be construed as preventing a department from entering into an arrangement with a person that calls for repayment to be made in instalments and interest to accrue and be paid on the total amount outstanding.

SOR/99-30, s. 3.

Concessionary Loans

7 (1) Subject to subsection (2), in the case of a late or missed payment on a concessionary loan, interest is payable on the amount of the late or missed payment and accrues during the period beginning on the due date and ending on the day before the day on which payment is received by Her Majesty or an agent of Her Majesty, at a rate equal to the difference between the rate set out in section 5 and the concessionary rate set out in the loan agreement.

(2) Subsection (1) does not apply to

(a) concessionary loans that are made to sovereign states and to which a multilateral debt relief agreement or undertaking to which Canada is a party applies; or
(b) concessionary loans that are made to international organizations or sovereign states for the purpose of developmental assistance.

SOR/99-30, s. 4.

Exceptions for Small Amounts, Errors and Breakdowns

8 Notwithstanding any other provision of this Part,

(a) no interest is payable to the extent that the interest accrued as a result of

(i) any error made or delay caused by Her Majesty, or a duly authorized agent of Her Majesty, in processing a payment or establishing an amount payable, or
(ii) a breakdown or other failure in the system or communication links customarily used by the Government of Canada to process payments; and

(b) no interest is payable where the total amount payable for a period, including accrued interest, is less than the minimum amount for which a demand for payment would normally be issued for that period in respect of the service or program concerned and no demand for payment would otherwise be issued.

Waiver

9 (1) The appropriate Minister of a department or any public officer authorized in writing by that Minister may waive or reduce interest provided for by this Part where

(a) the administrative costs of assessing, billing and collecting the interest would exceed the amount of interest owing;
(b) the interest is in respect of an amount in dispute that has been settled in whole, or in part, in favour of the debtor;
(c) an overpayment or erroneous payment of salary, wages or recurring benefits or allowances is to be recovered from a subsequent payment of salary, wages or recurring benefits or allowances, as the case may be, except in the circumstances described in subsection 6(2); or
(d) the interest is payable under subsection 6(2) and a fine or penalty that takes into account interest on the overpayment or erroneous payment has been imposed.

(2) Subject to subsection (3), the appropriate Minister of a department or any public officer authorized in writing by that Minister may waive or reduce interest provided for by this Part where the debtor was prevented from making a payment by circumstances beyond the debtor’s control, including

(a) death or incapacity of the debtor or of the person who is directly responsible for making the payment on behalf of the debtor;
(b) a postal disruption that can reasonably be considered to have delayed the payment or made it impossible, where no alternative means of making payment that would not cause undue inconvenience to the debtor are available; and
(c) a delay in the processing of a pre-authorized debit that is caused by a breakdown or other failure in the external systems or communication links customarily used to process such debits.

(3) When contemplating a waiver or reduction of interest under subsection (2), the appropriate Minister or the public officer shall take into consideration

(a) the case presented by the debtor;
(b) the debtor’s payment history and history of voluntary compliance; and
(c) the debtor’s diligence in conducting the debtor’s affairs in relation to the debt.

PART II Administrative Charges for Dishonoured Instruments

Charges

10 (1) Where an instrument tendered in payment or settlement of an amount due to Her Majesty is, for any reason, dishonoured, an administrative charge of $15 is payable by the debtor to Her Majesty.
(2) Where a payment is made by Her Majesty to a financial institution in order to reimburse that institution for an amount initially credited to the Receiver General on the basis of a dishonoured instrument, an administrative charge of $10 is payable by the debtor to Her Majesty, in addition to the charge referred to in subsection (1).
(3) Where a financial institution charges an amount to Her Majesty for monitoring the account of a debtor who has tendered a dishonoured instrument and for subsequently certifying or clearing that dishonoured instrument, an administrative charge in that amount is payable by the debtor to Her Majesty, in addition to the charge referred to in subsection (1).

Exception for Errors and Breakdowns

11 Notwithstanding section 10, no administrative charge becomes payable as a result of

(a) any error made or delay caused by Her Majesty, or a duly authorized agent of Her Majesty, in processing a payment or an instrument used to make a payment; or
(b) a breakdown or other failure in the system or communication links customarily used by the Government of Canada to process payments or instruments used to make payments.

Waiver

12 (1) The appropriate Minister of a department or any public officer authorized in writing by that Minister may waive an administrative charge where the administrative costs of assessing, billing and collecting the administrative charge would exceed the amount of the administrative charge.
(2) Subject to subsection (3), the appropriate Minister of a department or any public officer authorized in writing by that Minister may waive or reduce an administrative charge where circumstances beyond the debtor’s control, including an error made by the financial institution or other institution on which the instrument tendered in payment by the debtor is drawn, resulted in the instrument being dishonoured.

(3) When contemplating a waiver or reduction of an administrative charge under subsection (2), the appropriate Minister or the public officer shall take into consideration

(a) the case presented by the debtor; and
(b) the debtor’s diligence in taking action to remedy the situation.

PART III General

13 Administrative charges payable to Her Majesty under Part II are in addition to any interest payable to Her Majesty under Part I or any other Act of Parliament or regulation, or any order, contract or arrangement.

14 Where an instrument is tendered in payment, in whole or in part, of an amount owing to Her Majesty, including any interest payable under Part I, and that instrument is subsequently dishonoured, the interest continues to accrue without taking into account the purported payment.