Tax instalments

A tax instalment is a tax payment made in advance, in small amounts throughout the year, rather than as a single large lump sum at the end. Both individuals and businesses must make these payments when their tax liability exceeds a certain threshold, in order to spread out the tax bill.

At a glance

Tax payments made in advance throughout the year, rather than in a single lump sum
For individuals: required if the tax due exceeds $3,000 ($1,800 for Quebec residents)
For a business: required when taxes exceed $3,000, often on a monthly basis
They help you avoid a big surprise bill and spread the cost out over the year
For individuals, there are four due dates throughout the year: March 15, June 15, September 15, and December 15

Why it matters

It’s a bit like paying your rent every month instead of a whole year’s worth all at once: easier to manage. The government requires these advance payments from those with high tax bills, because no employer withholds tax on their behalf. A corporation generally must make estimated tax payments if its tax liability exceeds $3,000; an eligible small business (a CCPC, that is, a Canadian-controlled private corporation, that claims the small business deduction) can pay quarterly rather than monthly. Failing to make an estimated tax payment will result in interest charges. Bankeo connects you for free with a vetted accountant or CPA who calculates the correct amount based on your projected income, and we’re here to support you every step of the way.

The trigger is the same threshold as for your T1 return : An individual in Quebec is subject to these payments as soon as their net tax exceeds $1,800 ($3,000 at the federal level) in the current year or in either of the two preceding years; a corporation calculates them based on its T2 return. Example: With an estimated annual tax liability of $8,000, an individual pays approximately $2,000 on each of the four due dates (March 15, June 15, September 15, December 15). The calculation guidelines are available on the Canada Revenue Agency. Planning for these payments in advance helps you avoid unpleasant surprises at the end of the year: Bankeo connects you, at no cost, with an accountant who will help you plan them and support you every step of the way.

Frequently asked questions

What does this actually mean?

Instead of paying your entire tax bill in one lump sum after the end of the year, you make instalment payments throughout the year (often four payments for individuals, and monthly payments for corporations). At the end of the year, the total is calculated: these advance payments reduce the amount still owed.

Who is required to pay tax instalments?

Individuals (including self-employed individuals) whose tax liability exceeds $3,000 ($1,800 in Quebec) in the current year and in either of the two preceding years, as well as most corporations with taxes exceeding $3,000.

What happens if I forget to make them?

The government charges interest, and sometimes a penalty if the delay is significant. Bankeo connects you for free with a vetted accountant or CPA who calculates your estimated tax payments and monitors due dates, at no cost to you, and we’re here to support you every step of the way.