Tax instalments
Instalments are periodic prepayments of income tax required when too little tax is withheld at source, due quarterly on March 15, June 15, September 15 and December 15 for individuals.
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Key facts
| Category | Personal tax |
|---|---|
| Individuals | Required where net tax owing exceeds the threshold in the current and either of the two prior years |
| Individual due dates | March 15, June 15, September 15, December 15 |
| Corporations | Generally monthly; quarterly for eligible CCPCs |
| Options | No-calculation, prior-year, or current-year estimate |
| Authority | Canada Revenue Agency; Revenu Québec |
What it means in practice
The CRA requires instalments when your net tax owing exceeds the threshold in the current year and in either of the two preceding years. Self-employed people, retirees with several pensions, and investors with significant non-registered income are the usual cases. You can pay the amount the CRA proposes in its reminder, base payments on last year's tax, or estimate the current year. Following the CRA's own figures protects you from interest even if it turns out to be too little; the other two methods do not. Interest on late or short instalments compounds daily, and a further penalty applies once instalment interest passes a set amount. Corporations follow a separate monthly or quarterly schedule.
Three ways to calculate, and the risk in each
The no-calculation option follows the amounts on the CRA's reminder notice. Paying those in full and on time removes instalment interest entirely, even if your actual income turns out higher — which makes it the safe choice when income is unpredictable. The prior-year option bases instalments on last year's tax. It works well when income is stable and better than the reminder when this year is quieter. The current-year option estimates this year's tax and is the cheapest when income has genuinely fallen — but if the estimate is too low, interest is charged on the shortfall. Instalment interest is compounded daily and is not deductible.
FAQ
I got a refund. Why am I being charged instalment interest?
Can a later instalment make up for one I missed?
Need this applied to your situation?
A definition only gets you so far. Talk to a Montréal CPA about what this means for your return — in English or French.