The current year
Your net tax owing this year will be more than $3,000. That is tax owing after any amounts already withheld — not your total tax bill.
Guides · September 2026
Tax instalments: who has to pay, and what happens if you don't
The 15 September instalment is the one that catches people. It arrives without ceremony, months after the last return was filed, and it usually lands on someone who had a good year and did not change anything about how they were paid.
Instalments are not an extra tax. They are the same tax, paid earlier, because CRA is not willing to wait a full year for it.
If you are an employee, tax comes off every paycheque and CRA gets its money throughout the year. If you are self-employed, drawing dividends, collecting rent, or realising investment gains, nothing is withheld. CRA's answer to that is instalments: four payments a year, so the money arrives at roughly the same pace it would from a payroll.
Nothing about instalments changes what you ultimately owe. They change when you pay it, and there is a cost to getting the timing wrong.
Who actually has to pay
The test has two halves, and both must be true.
One of the two prior years
Your net tax owing was also more than $3,000 in either of the two preceding years.
One bad year is not enough
If you crossed $3,000 for the first time this year and were under it in both prior years, you do not have to pay instalments. You will simply owe the balance when you file — and you will likely be in the instalment system next year.
The threshold is $1,800 rather than $3,000 if you are a Quebec resident.
The three ways to calculate them
CRA sends instalment reminders in February and August. You do not have to use their number, and which method you choose has real consequences.
The no-calculation option
Pay exactly what CRA's reminder says. This is the safe choice: if you pay those amounts in full and on time, CRA charges no interest or penalty even if your actual tax turns out higher. You are buying certainty.
The prior-year option
Base each instalment on last year's net tax owing, split into four. Useful when this year looks like last year but CRA's reminder is based on a year that was unusually high.
The current-year option
Estimate this year's tax and pay a quarter each time. This is where the money is if your income has genuinely dropped — but it carries all the risk. Estimate too low and CRA charges interest as though you had never made the estimate.
The pattern worth noticing: the option that saves you the most cash is the one that punishes you for being wrong. If your income is stable or rising, take CRA's number and stop thinking about it. If it has fallen sharply, the current-year option is worth the arithmetic — but do the arithmetic properly.
What a missed instalment costs
Instalment interest
Charged at the prescribed rate plus four percentage points, running from the day each payment was due. The prescribed rate is set quarterly, so this moves.
The instalment penalty
If your instalment interest for the year comes to more than $1,000, CRA adds a separate penalty on top. This is the one that turns an oversight into a real number.
It compounds quietly
Interest runs from each missed date, not from the filing deadline. A March instalment missed is accruing by September, and nobody sends you a monthly statement about it.
You can offset it
Paying a later instalment early earns offset interest that can reduce what you owe on an earlier one. If you have missed one this year, paying the December instalment early is worth doing rather than waiting.
If you are incorporated
Corporate instalments follow different rules, and business owners routinely confuse the two — you may be paying both personally and through the corporation.
Monthly by default
Corporations generally pay monthly instalments. Eligible small Canadian-controlled private corporations with a clean compliance history can pay quarterly instead, which is worth asking about.
The $3,000 floor
No instalments are required where the corporation's total taxes payable for the year are $3,000 or less, in either the current or prior year.
Your first year is free
A new corporation has no prior year to base instalments on, so generally nothing is due in year one. Year two is where it starts, and that is the year people get caught.
Alberta is separate
Alberta has its own corporate instalment requirements administered by Tax and Revenue Administration, distinct from the federal ones. Meeting one does not satisfy the other.
Common questions
Who has to pay tax instalments in Canada?
You have to pay personal tax instalments if your net tax owing is more than $3,000 in the current year and was also more than $3,000 in either of the two previous years. In Quebec the threshold is $1,800. If you only cross the line in one year, you do not have to pay instalments.
When are personal tax instalments due?
15 March, 15 June, 15 September and 15 December. If the date falls on a weekend or public holiday, the next business day is accepted.
What happens if I miss an instalment?
CRA charges instalment interest at the prescribed rate plus four percent, calculated from the day the payment was due. If that interest exceeds $1,000, an additional instalment penalty applies on top.
Can I just pay the amount CRA sent me?
Yes, and it is the safest option. If you pay the amounts on CRA's instalment reminder in full and on time, no interest or penalty applies even if you end up owing more when you file.
Do corporations pay instalments too?
Yes, usually monthly, though eligible small Canadian-controlled private corporations can pay quarterly. Instalments are not required where total taxes payable for the year are $3,000 or less, and a corporation in its first year generally has nothing to base instalments on.
What to do this week
If the 15th is close and you are not sure where you stand.
Check your CRA account
The instalment reminder and the amount CRA expects are both in My Account, or we can see them through Represent a Client if we act for you.
Pay something rather than nothing
A partial payment reduces the interest base. There is no advantage in waiting until you can pay the full amount.
Then look at the December instalment
If this year's income is materially different from last year's, the December payment is the one where a proper estimate is still worth doing.
Talk to us before you commit to anything
Thirty minutes, no charge, and a straight answer on whether we're the right fit — including when we're not. You'll have the scope and the fee in writing before any work starts.