The Canada Revenue Agency requires you to pay CRA tax installments in quarterly amounts when your net tax owing is over $3,000 in the current year and was also over $3,000 in either of the two previous years. For Quebec residents, the federal threshold is $1,800. The four due dates are March 15, June 15, September 15, and December 15.1Canada Revenue Agency. Required Tax Instalments for Individuals – Payment Due Dates
Who Actually Has to Pay
Two conditions have to be met at the same time. Your net tax owing for the current year must exceed $3,000 ($1,800 in Quebec), and your net tax owing in either of the two prior years must have exceeded the same threshold.2Canada Revenue Agency. Who Has to Pay – Required Tax Instalments for Individuals
That second condition matters. If this is the first year your tax bill has jumped over $3,000 and both prior years were below it, you don’t owe installments this year. The obligation only kicks in once you’ve crossed the threshold in the current year and at least one of the two preceding years.
Net tax owing is not your total tax bill. It’s what remains after credits and tax already withheld at the source, including employer deductions, tax taken off pension payments, and Old Age Security clawbacks. If enough tax is coming off at source to keep your balance under $3,000, installments don’t apply even when your gross liability is much higher. This is why installments most often catch self-employed people, landlords, retirees drawing multiple pensions, and anyone with meaningful investment income that isn’t taxed at source.
What the CRA Reminder Means
The CRA sends installment reminders on form INNS1 twice a year. The February reminder covers the March and June payments; the August reminder covers September and December.2Canada Revenue Agency. Who Has to Pay – Required Tax Instalments for Individuals They arrive by mail or through CRA My Account and suggest an amount based on your most recently assessed returns.
Getting a reminder does not automatically mean you owe. If your net tax owing for the current year will be $3,000 or less ($1,800 or less in Quebec), you can ignore it. Reminders are generated from past filing patterns, so someone who has just retired into fully withheld pension income may still receive one they don’t have to act on.
The Four Due Dates
- March 15
- June 15
- September 15
- December 15
When a due date falls on a Saturday, Sunday, or CRA-recognized public holiday, a payment received the next business day counts as on time.1Canada Revenue Agency. Required Tax Instalments for Individuals – Payment Due Dates For mailed cheques, the CRA counts the date of delivery, not the postmark.3Canada Revenue Agency. Pay Through the Mail – Payments to the CRA If a deadline is close, pay electronically.
Farmers and fishers whose main self-employment income comes from those activities follow a different schedule: one installment payment due December 31, with a reminder from the CRA in November.1Canada Revenue Agency. Required Tax Instalments for Individuals – Payment Due Dates The same $3,000 threshold applies.
Three Ways to Calculate What You Owe
The CRA offers three calculation methods, and the right one depends on how your income this year compares to the past two.4Canada.ca. Required Tax Instalments for Individuals – Options to Calculate
The no-calculation option is the simplest: pay the amounts shown on your INNS1 reminders. The CRA does the math from your latest assessed returns. This works when your income, deductions, and credits stay roughly steady year to year, and it’s the safest choice from a penalty standpoint because you’re following the CRA’s own figures.
The prior-year option bases all four payments on last year’s net tax owing plus any CPP contributions and voluntary EI premiums payable. Use this when this year’s income looks like last year’s but different from two years ago, since the no-calculation figure blends both prior years.
The current-year option asks you to estimate this year’s net tax owing, CPP contributions, and voluntary EI premiums, then divide by four. This is the option to pick when your income has dropped significantly compared to both prior years. It also carries the most risk: if you underestimate, interest accrues on the shortfall from each missed due date. Under either the prior-year or current-year option, paying in full and on time avoids interest and penalties, so long as your numbers hold up.
For the prior-year and current-year options, the CRA publishes a calculation chart (available as a PDF on its website) that walks through estimated net income, credits, and expected source deductions.4Canada.ca. Required Tax Instalments for Individuals – Options to Calculate
How to Send the Payment
Electronic options are faster and more reliable than a mailed cheque.
Through online banking, add the CRA as a payee in your bank’s bill payment service and use your social insurance number as the account identifier. Most banks process the payment within one to two business days.
The CRA’s My Payment service on its website accepts Visa Debit and Debit Mastercard. Credit cards are not accepted. Payments submitted during business hours are usually dated the same day; late-evening, weekend, and holiday payments are dated the next business day. There’s no CRA fee for using it.5Canada Revenue Agency. Pay With a Debit Card Through the CRA’s My Payment Service
Pre-authorized debit, set up through CRA My Account, pulls the payment automatically from your bank account on each due date. This is useful if you tend to lose track of deadlines.
You can also pay in person at most Canadian financial institutions using a personalized remittance voucher from the CRA, which ensures the funds land in the right account. Your bank may set its own transaction limits or fees on large online payments, so check before sending an unusually big installment.
If You Pay Late or Short
Missing an installment or paying less than required triggers installment interest starting the day after the due date. The CRA calculates it daily and compounds it daily at the prescribed rate.6Canada Revenue Agency. Interest and Penalty Charges – Required Tax Instalments for Individuals7Canada Revenue Agency. Interest Rates for the First Calendar Quarter8Canada Revenue Agency. Interest Rates for the Second Calendar Quarter
A separate penalty applies on top of interest, but only if your installment interest charges for the year exceed $1,000. In practice, the penalty catches taxpayers who are well behind. If you made most of your installments and came up a bit short, you’ll owe interest but probably not a penalty.6Canada Revenue Agency. Interest and Penalty Charges – Required Tax Instalments for Individuals
The CRA uses an offset method that can work in your favour. Overpaying an installment or paying one early earns interest credits that reduce or eliminate the interest charged on any late or insufficient payments in the same tax year. The credit rate matches the rate on underpayments, so early payments cancel out late ones dollar for dollar. Two limits: credits can only bring your installment interest down to zero (a net surplus won’t be refunded), and credits only start accruing on payments from the beginning of the tax year. If you know one quarterly payment will be late, making the next one early and slightly larger is a practical way to limit the damage.
Quebec Residents Also Pay Revenu Québec
The $1,800 federal threshold only covers what you send to the CRA. Revenu Québec requires separate provincial installments when your net provincial income tax payable is more than $1,800 in the current year and was more than $1,800 in either of the two preceding years.9Revenu Québec. Instalment Payments You’ll make payments to both agencies on their respective schedules. Missing the Quebec installments carries its own interest and penalties under provincial rules.
Asking for Relief
If something outside your control kept you from meeting your installment obligations, such as serious illness, a natural disaster, or a CRA processing error, you can apply for taxpayer relief to have interest and penalties reduced or cancelled.10Canada Revenue Agency. Cancel or Waive Penalties and Interest at the CRA The CRA has a self-evaluation tool on its website to help you gauge whether your situation qualifies.
Expect a wait. The CRA aims to decide within 180 days, but most decisions are currently taking up to twelve months, and complex cases run longer. Apply as soon as you can, and keep documentation of whatever caused the missed payments. The CRA will want specifics rather than a general account of hardship.