Waiting to Pay Your Tax Bill? Why the CRA Wants Your Money Sooner
Do you plan to settle your tax bill once you file your return in spring? Many people do—but if you owe more than $3,000 in net tax for two straight years, the CRA expects quarterly installment payments.
Let’s explore how CRA installment rules work, what happens if you ignore them, and how to manage your payments efficiently.
How CRA Tax Installments Work
If your net tax (after credits/refunds) surpassed $3,000 in the current and one of the previous two years, the CRA sends installment notices in February and August.
The payments are due March 15, June 15, September 15, and December 15. You can choose between:
CRA suggested amount (no-calculation method)
Prior-year method (divide last year’s tax by 4)
Current-year estimate (project this year’s tax, split into quarters)
What If You Miss or Underpay?
Interest: Charged daily, compounded, at CRA’s prescribed rate on any shortfall.
Penalty: If annual interest exceeds $1,000, CRA charges either a flat $1,000 or 25% of interest (whichever is greater), halved.
Paying early or overpaying one installment can reduce both interest and potential penalties.
Why Installments Matter
Skipping installments might seem harmless until you realize how interest stacks up:
Miss one payment by just 30 days → you'll pay daily interest compounded on the full amount.
Consistently doing this could mean hundreds—or even thousands—in lost cash flow.
Installments also help you avoid a large, stressful lump-sum payment when filing.
Smart Installment Strategies
Check early: Watch for CRA notices and understand your tax owing.
Pick your method: Choose one of the three installment methods and set reminders.
Pay early: Make payments before the due date to reduce interest.
Monitor payments: Link your CRA My Account to track history and confirm receipts.
What You Should Know
PAUSE before you decide to wait until filing. CRA expects quarterly payments—and missing them could cost you significantly more than the taxes themselves.
Need help estimating payments or setting reminders? I’ve helped GTA small businesses manage installments and avoid penalties—reach out for support.
