What are tax instalments?

Why do I have to make tax instalments to the CRA?

The CRA imposes tax instalments for a couple of reasons. They want to receive money in advance, but they also want to ensure that tax payers pay their amount in full. Tax instalments are required when you owe over $3,000 for the following: 

  • Corporate taxes
  • Personal taxes
  • GST

You pay instalments towards the future year based on the prior year's balance owing. These payments are then credited to your total taxes owing at the end of the year. It is common to be required to pay quarterly, but the CRA may request that you pay monthly. 

If you do not make your instalment payments and you have a balance owing at the end of the year, the CRA will charge you interest on any unpaid instalments. As these are estimates, the calculations can become complicated.

We have an excellent blog explaining instalment calculations.