Change to calculation of Ontario Discount Rate

Rule 53.09 of the Ontario Rules of Civil Procedure was recently amended with respect to the calculation of the Ontario discount rate for trials commencing after January 1, 2014.  The change effectively increases the discount rate for the first 15 years by 0.5%.  The discount rate for periods after 15 years remains at 2.5%.  A higher discount rate results in a lower present value.

Also, the discount rate for the first 15 years will no longer be negative.

As well, the Rule 53.09 calculation will be based on the most recent six months of interest rates rather than twelve months, which will result in a more current figure.

Once the Bank of Canada publishes interest rates at the end of August, the appropriate discount rate for 2014 can be calculated.

Of course, these changes have no impact on structured settlement quotes, which are based on current market rates.

If you have any questions regarding this information please do not hesitate to contact us.

By: Gordon Hornsveld, Principal (B.COMM.,CPA,C.A.)