Paying tax by instalments

If not enough tax comes off your income at source, the CRA may expect you to pay your tax during the year, in four instalments. You have to pay instalments for 2026 if your net tax owing is more than $3,000 ($1,800 if you live in Quebec) for 2026 and was also more than that in either 2025 or 2024.

Who usually has to pay

Instalments mostly affect people with income that has little or no tax withheld: the self-employed, landlords, investors, people with certain pensions, and people with more than one job. They aren’t only for business owners.

Two things decide whether you’re in:

• Where you live on December 31. That sets the threshold: $3,000 of net tax owing in most of Canada, $1,800 in Quebec.
• Your net tax owing in this year and the last two. You must pay only if this year is over the threshold and either of the two previous years was too.

The CRA sends instalment reminders to people who are likely to have to pay: one in February for the March and June payments, and one in August for the September and December payments. Each suggests an amount. If you get a reminder but your net tax owing for the year will be at or under the threshold, you don’t have to pay.

The due dates

Instalments are due on:

• March 15
• June 15
• September 15
• December 15

If a due date falls on a Saturday, Sunday or public holiday recognized by the CRA, your payment is on time if the CRA receives it the next business day. If your main income is self-employment income from farming or fishing, you have a single due date instead: December 31.

How much to pay: three options

You choose how to work out your instalments. Pick the one that fits how your income is changing.

1. No-calculation option. Pay the amounts shown on the CRA’s reminders, which are based on your latest assessed return. Best if your income, deductions and credits are about the same each year.
2. Prior-year option. Base your payments on last year’s return. Best if this year will look like last year, but different from the year before.
3. Current-year option. Base your payments on an estimate of this year’s net tax owing, plus any CPP contributions and voluntary EI premiums you’ll owe. Best if this year’s income will be very different from the last two years, for example because you’ve cut back your work. If your estimate turns out too low, you can be charged interest.

The CRA’s calculation chart for instalment payments walks you through the prior-year and current-year options. With either of those, if you pay in full by the due dates, the CRA won’t charge instalment interest or a penalty, unless your estimated amounts were too low.

Reducing instalments with withholding

Another way to shrink or avoid instalments is to have tax deducted from income that allows it: Old Age Security, CPP benefits, EI benefits and employer pensions. For OAS and CPP, you ask Service Canada; for EI or an employer pension, you give a TD1 form to your employer or pension plan administrator. Tax can’t be withheld from self-employment, investment or rental income, or from capital gains, so if that’s your main income, instalments are how you pay as you go.

If you pay late or too little

Instalment interest applies if you were required to pay, received a reminder showing an amount, and then paid late, paid too little or didn’t pay. It’s compounded daily at the CRA’s prescribed rate, which can change every three months. The CRA works it out using whichever calculation option gives you the least interest, and charges it only if it’s more than $25.

An instalment penalty applies only if your instalment interest for the year is more than $1,000. The CRA takes the higher of $1,000 and 25% of the interest you’d have owed with no instalments at all, subtracts it from your actual instalment interest, and charges half of what’s left.

If you fall behind, you can cut the interest by paying your next instalment early or paying more than required. That earns credit interest, which offsets interest charges for the same year, though it isn’t refunded.

Quebec residents

If you live in Quebec, you deal with two governments. The CRA collects federal instalments using the $1,800 threshold. Revenu Québec collects instalments for Quebec income tax separately, on the same four dates, generally when your Quebec net income tax payable is expected to be more than $1,800 for the year and was also over that amount in one of the two previous years. It sends its own payment notices in February and August, and farmers and fishers pay once, by December 31.

What to do

• Watch for the February and August reminders, or check them in your CRA account.
• Choose the option that matches your year, and put the four dates on your calendar.
• If your income will drop this year, the current-year option may let you pay less.
• Self-employed? Our deadlines guide covers the rest of your year’s dates.