If you’ve ever received a letter from the CRA asking you to make “instalment payments,” you probably had one of two reactions:
- “Wait… didn’t I already pay my taxes?”
- “Why are they asking for money before I’ve even filed?”
Take a deep breath and let’s walk through this together.
Instalments are not a penalty.
They’re not random.
And they’re not optional (if you meet the requirements).
They are simply the CRA’s way of making sure taxes are paid throughout the year instead of all at once.
Let’s break it down.
1. Personal Income Tax Instalments (Sole Props & Individuals)
If you are:
- A sole proprietor
- Self-employed
- Earning rental income
- Earning investment income
- Or receiving income without tax withheld
You may be required to make personal tax instalments.
When Are Personal Instalments Required?
You generally have to pay instalments if:
- You owe more than $3,000 in tax
- In the current year and either of the two previous years
So if you had a big tax bill this year and the year before? CRA assumes that trend is continuing.
When Are They Due?
Personal tax instalments are due:
- March 15
- June 15
- September 15
- December 15
Four equal payments throughout the year.
Why CRA Does This
If you were an employee, tax would be deducted from every paycheque.
If you’re self-employed? No one is withholding tax for you.
Instalments simply mimic payroll deductions, just spread across the year.
2. Corporate Income Tax Instalments
If you operate through a corporation, instalments are different, and often more frequent.
When Are Corporate Instalments Required?
A corporation generally has to pay instalments if:
- Its total tax payable for the current year or either of the previous two years is more than $3,000
Most corporations fall into monthly instalments.
When Are They Due?
Typically:
- Monthly (most common)
- Or quarterly (if eligible as a small CCPC meeting certain conditions)
Monthly instalments are due one month after the end of each month.
So if your year end is March 31:
- April instalment is due May 31
- May instalment is due June 30
…and so on.
Yes. It’s constant.
Yes. Planning matters.
3. GST Instalments (Annual Filers)
If you are an annual GST filer, you may also have to make instalments.
This surprises a lot of people.
When Are GST Instalments Required?
If your net GST owing was $3,000 or more in the previous year, CRA requires quarterly instalments the following year.
Even though you only file one GST return annually.
When Are GST Instalments Due?
- April 30
- July 31
- October 31
- January 31
Then you file your annual GST return and either:
- Pay the remaining balance
- Or receive a refund
Why It’s Important to Follow Instalment Requirements
This is the part people don’t love hearing.
If instalments are required and you don’t pay them:
- CRA charges instalment interest
- They may charge instalment penalties
- The interest compounds daily
- And it does not go away just because you “didn’t know”
Even if you pay your full balance at year end, you can still be charged interest for not paying throughout the year.
That’s the piece most people miss.
But What If Income Fluctuates?
This is where strategy matters.
CRA gives you three calculation options:
- No-calculation option (based on their reminder)
- Prior-year option
- Current-year option (if income is lower)
If your income drops, you can adjust instalments.
But you need to calculate carefully, because underpaying leads to interest.
This is where having a bookkeeper involved makes a huge difference.
Why We Plan for Instalments (Instead of Being Surprised)
We don’t just file returns and hope for the best.
We:
- Estimate taxes throughout the year
- Tell you how much to set aside
- Remind you about instalment dates
- Adjust when income changes
- And help you avoid unnecessary interest
Instalments are not punishment.
They’re just cash-flow planning.
And when you plan for them properly? They stop feeling scary.
They just become another business rhythm.
The Big Takeaway
If you owed more than $3,000 last year, there’s a good chance instalments are part of your life now.
Ignoring them doesn’t make them disappear.
Planning for them makes everything smoother.
And if you’re not sure whether they apply to you?
That’s exactly the kind of question we love answering over a virtual call!
