Tax instalments are payments made throughout the year to cover taxes that would otherwise be due when you file your annual tax return. You pay these instalments to the CRA throughout the year while earning income.
Crowe MacKay’s tax experts answer common questions about personal income tax instalments below.
You have to pay your income tax by instalments for the current year if your net tax owing for the current year will be more than $3,000 AND your net tax owing was more than $3,000 in either of the two previous calendar years.
If you receive income that has no or insufficient tax withheld, you may have to pay tax by instalments. This can happen if you receive:
You have three instalment payment options:
Choosing the best instalment payment option for your situation should result in you not overpaying your tax or having a large balance owing when you file your return. You do not have to tell the CRA which option you choose for your payment plan.
No, instalment reminders sent by the CRA are always based on the no-calculation option. You can pay the instalments based on the option you choose as discussed above.
The quarterly instalment payments are due March 15, June 15, September 15, and December 15. When a due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, they consider your payment to be paid on time if received or postmarked on the next business day. Payments you make in person at your financial institution, or electronically are considered received by the CRA on the date of payment.
Each instalment reminder package the CRA sends includes two copies of Form INNS3, Instalment Remittance Voucher. If you need more copies, you can download it from the CRA's website. To make your instalment payments, you have three options:
Instalments paid to the CRA can be charged interest and penalties if you fail to pay your required tax instalments or have paid an insufficient amount.
Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Contact your Crowe MacKay advisor for more information.
If you are looking for Tax Services, Crowe MacKay provides personalized support. Our tax professionals will help you maximize tax-planning opportunities and ensure the minimum amount required by law is paid.
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