Who has to pay tax instalments in Canada?
The CRA requires quarterly instalments if your net tax owing (tax minus amounts withheld) is more than $3,000 ($1,800 for Quebec residents) in the current year and in either of the two previous years. This commonly affects self-employed people, retirees, and those with significant investment income.
When are tax instalments due in Canada?
Personal tax instalments are due on four dates: March 15, June 15, September 15, and December 15. Missing a payment or paying late can trigger instalment interest and, in some cases, a penalty.
What are the CRA instalment calculation methods?
There are three: the no-calculation method (CRA tells you amounts based on prior returns), the prior-year method (one quarter of last year's net owing), and the current-year method (one quarter of your estimated current-year owing). Using the lowest applicable method that still avoids interest is a common strategy.
What happens if I do not pay instalments?
If you were required to pay and did not, the CRA charges instalment interest at the prescribed rate, compounded daily. If instalment interest exceeds $1,000, an additional instalment penalty may apply. Paying on time or overpaying early avoids these charges.