Instalment Payments Guide

1. When instalments are required

ITA s. 156.1 triggers personal instalments if your net tax owing exceeds $3,000 (federal + provincial, excluding Québec) in the current year and in either of the two prior years. Quebec residents file their federal instalments at $1,800 (because the federal calculation excludes Québec abatement). Instalment dates: 15 Mar, 15 Jun, 15 Sep, 15 Dec.

2. The three calculation methods

• No-calculation method — pay the amount on the CRA's Instalment Reminder. Built from prior-year data.
• Prior-year method — pay 25 % of last year's net tax owing each quarter.
• Current-year method — estimate this year's tax and pay 25 % each quarter.

You pick the method each year. The CRA accepts whichever produces the lower total — but only one provides safe-harbour protection if you guess wrong.

3. Safe harbour — the critical rule

4. Instalment interest & penalty

Interest accrues at the prescribed rate (~9 % p.a., reset quarterly) on each shortfall from its due date. If instalment interest exceeds $1,000, an additional 50 % penalty on the excess applies (ITA s. 163.1). Interest is not deductible.

5. GST/HST instalments

Separate regime. Annual filers owing more than $3,000 in net GST/HST must remit quarterly instalments (ETA s. 237). Due 1 month after each fiscal quarter.

6. How to pay — step by step

Option A: CRA My Account

1. Sign in to CRA My Account
2. Go to Accounts and payments → Make a payment
3. Choose "Income tax instalment" as the payment type — not "Amount Owing"
4. Enter the amount and pay via CRA My Payment (Interac debit) or one-time PAD

Choosing the wrong payment type ("Amount Owing" instead of "Instalment") can cause the payment to be allocated to a different period for interest calculations — a common cause of unexpected instalment interest the following year.

Option B: Online banking bill payment

1. In your bank's bill-pay screen, search for and add the payee "CRA – Income Tax Instalments" (also listed as "Federal – Tax Instalments"). Do not select "Amount Owing" or "GST/HST".
2. Account number = your 9-digit SIN (double-check every digit; misrouted payments take weeks to recover)
3. Schedule the payment to clear by the due date. CRA typically takes 3–5 business days to post.

Option C: Pre-authorized debit (PAD) — set and forget

1. CRA My Account → Pre-authorized debit
2. Choose Recurring → frequency Quarterly → start date March 15
3. Enter the amount per withdrawal (matches your INNS reminder)
4. You can edit upcoming amounts in My Account up to a few business days before each withdrawal — useful if your income changes mid-year

Option D: In-person at a financial institution

Print a remittance voucher from My Account (you cannot use a photocopy; it must be the original or freshly printed). Take it to any Canadian financial institution branch with your payment.

6a. Quarterly amount table (Ontario reference)

6b. Quebec — dual instalments to two governments

Quebec residents pay two separate instalment streams: federal to CRA and provincial to Revenu Québec. Same four due dates (March 15, June 15, Sep 15, Dec 15) but different payees, different account numbers, different reminder notices.

The most common Quebec instalment error: paying the federal CRA portion on time and forgetting Revenu Québec entirely → provincial instalment interest accrues separately and isn't caught until the next provincial return. Set both PADs on the same day.

6c. GST/HST instalments are separate

• Trigger: prior-year net GST/HST owing > $3,000 (ETA s.237)
• Dates: 1 month after each fiscal quarter — for a calendar-year filer that's April 30, July 31, October 31, January 31 — completely different from income-tax instalment dates
• Different payee: "CRA – GST/HST" in your bank's bill payment list, not "CRA – Income Tax Instalments"
• Different account format: 9-digit BN + RT0001 suffix, not SIN

7. First year of self-employment

No instalments are required in your first year — there is no prior-year tax to trigger them. Save aside ~25–30 % of net income so the 30 April balance does not sting.

8. Common mistakes

• Ignoring the Instalment Reminder thinking it is optional
• Paying only at year-end and absorbing 9 % interest
• Electing current-year method, under-estimating, then triggering the s. 163.1 penalty
• Confusing income-tax instalments with GST/HST instalments (separate accounts)
• Quebec residents forgetting the Revenu Québec instalments are also required

9. Worked examples

$60,000 net self-employment income (Ontario)

Prior-year tax ≈ $11,800 → quarterly instalment ≈ $2,950.

$100,000 net (Ontario)

Prior-year tax ≈ $24,500 → quarterly instalment ≈ $6,125.

$150,000 net (Ontario)

Prior-year tax ≈ $44,800 → quarterly instalment ≈ $11,200.

Estimates exclude CPP and any provincial surtax/health premium. Use the Income Tax Calculator for your exact figures.