What are tax instalment payments and how do I enter them on the TaxTron Web?

Tax instalments are taxes paid in advance, as opposed to taxes paid in one lump sum, on or before the due date. The due date for individuals will be April 30th every year. If April 30th is a holiday or falls on Saturday or Sunday, it will be the next working day. Tax instalments are declared on the tax return- Line 47600 and hence, reduces overall tax liability by the amount paid in advance. Individual income-taxes, Corporation taxes and GST/HST taxes are all subject to instalments.

When are tax instalments required?

If your employer does not withhold income tax (i.e., if you have more than one employer or are earning income through self-employment, rental income, investment income, pensions etc.) tax installment payments may have to be paid.

Installment payments must be paid if the net tax owing exceeds $3000 ($1800 for Quebec residents).

If you expect more income this year, compared to prior years, instalment amounts can be increased. However, if you expect lower income this year, you can ignore the instalment reminder(s) through the CRA or lower the instalment amount.

When are instalments due?

Installments are due on the 15th each year for everyone. The CRA will send notices twice a year to remind you to pay the installments. A February reminder for March and June payments, and an August reminder for September and December payments.

Non-payment on stipulated date(s) will attract interest on a daily compounding basis and in some cases, a penalty, if the installment interest exceeds $1,000.

How to pay?

There are many options to pay including: online, in-person, and through mail.

Pay online: You can pay online by setting up an e-transfer or by using the CRA My Payment Service (which accepts Interac, Visa, and Mastercard). You can also set up Pre-authorized debits (PAD) to schedule future payments at predetermined dates

Pay in-person: You can pay at your Canadian bank, financial institution or credit union using a personal remittance voucher

Pay by-mail: You can pay by cheque along with the personal remittance voucher

How to enter instalments on the TaxTron Web?

On the TaxTron Web, please go to the Deduction page. Click “Benefits” and answer questions with reference to the Canada Working Benefit (CWB) and the Climate Action Incentive(CAI). When answering CAI questions, please click “next” and you will find the section to enter installment payments.