Tax Instalments Canada: Do You Need to Pay the CRA in Advance?

Most people think of taxes as something you calculate and pay at the end of the year. But if you're self-employed, incorporated, or earn significant investment or rental income, the CRA may require you to pay taxes in advance — in quarterly or monthly instalments throughout the year. Missing these payments triggers interest charges even if you owe nothing when you file.

What Are Tax Instalments?

Tax instalments are prepayments of income tax sent to the CRA during the year, before you file your annual return. Think of them like pay-as-you-go taxes. Employees have this done automatically through payroll deductions. Self-employed individuals and others without source deductions must do it manually.

The CRA charges instalment interest if you underpay — calculated at the prescribed rate (currently in the 8–10% range annually) on any shortfall. Even if you end up with a refund when you file, you can still be charged interest on underpaid instalments during the year.

Who Needs to Pay Personal Tax Instalments?

You are required to pay personal income tax instalments if your net tax owing exceeds $3,000 in the current year AND in either of the two preceding years. "Net tax owing" means your total tax payable minus any tax already withheld at source (CPP, EI, payroll deductions).

This typically affects:

• Self-employed individuals and sole proprietors
• Individuals with significant rental income
• Investors with substantial dividend or capital gains income
• People with multiple income sources who don't have enough withheld at source
• Incorporated business owners paying themselves dividends (no withholding on dividends)

Personal Instalment Due Dates (2026)

If you're required to pay personal income tax instalments, they're due four times per year:

• March 15, 2026
• June 15, 2026
• September 15, 2026
• December 15, 2026

If a due date falls on a weekend or holiday, it moves to the next business day.

How Much Should You Pay Each Quarter?

The CRA gives you three calculation options. You can use whichever results in the lowest payment and still avoid interest:

Option 1 — No-Calculation Method

Pay the amounts the CRA tells you on your instalment reminders. These are based on your prior year's tax, split into four equal payments. If you pay exactly what the CRA asks, you won't be charged interest — even if you end up owing more when you file.

Option 2 — Prior-Year Method

Calculate your instalment based on your previous year's net tax owing. Divide that amount by four and pay equal quarterly amounts. Use this if your income this year will be similar to last year.

Option 3 — Current-Year Method

Estimate your current year's tax and pay quarterly instalments based on that estimate. This is the most accurate method if your income has changed significantly — up or down — from last year. The risk: if you underestimate, you pay interest on the shortfall.

Corporate Tax Instalments

Corporations have different instalment rules. Most corporations must pay monthly instalments — not quarterly — throughout their fiscal year.

Who Must Pay Corporate Instalments?

A corporation must make instalment payments if its total federal and provincial tax payable for either the current or preceding year exceeds $3,000.

Quarterly Option for Small CCPCs

Canadian-Controlled Private Corporations (CCPCs) that meet all of the following conditions can pay quarterly instead of monthly:

• The CCPC claimed the Small Business Deduction in the current or previous year
• The corporation's taxable income does not exceed $500,000
• The corporation's taxable capital does not exceed $10 million
• The corporation has a perfect compliance history (all returns and remittances on time in the past 12 months)

Quarterly corporate instalments are due the last day of each quarter of the fiscal year — not the 15th like personal instalments.

How to Pay Instalments

Instalments can be paid through several methods:

• CRA My Account / My Business Account: Pay online directly
• Online banking: Add the CRA as a payee (use "CRA (revenue) – tax instalment" for personal or "CRA (revenue) – corporate tax instalment" for corporate)
• Pre-authorized debit: Set up through CRA My Account
• At your financial institution: Using an instalment remittance voucher
• By mail: Cheque payable to the Receiver General of Canada

What Happens If You Miss an Instalment?

Missing an instalment doesn't trigger a separate late-filing penalty like missing a return does. Instead, the CRA charges instalment interest on any shortfall at the prescribed rate (currently ~10% annually, compounded daily). This interest applies from the due date of the missed instalment to the date you actually pay — or the filing deadline, whichever comes first.

If you're significantly short and the CRA determines your instalment shortfall was unreasonably large, they can also charge an instalment penalty — though this is less common.