CRA Tax Instalments Explained

If not enough tax comes off your income at source, because you're self-employed, have rental or investment income, or have more than one job, the CRA may want you to pay during the year instead of all at once on April 30. Those payments are instalments, and late or short ones can cost you instalment interest.

Who has to pay

For 2026, you have to pay instalments if both of these apply:

• your net tax owing for 2026 is more than $3,000
• your net tax owing was also more than $3,000 in either 2025 or 2024

That $3,000 threshold applies in BC and everywhere else except Quebec, where it's $1,800. The province you live in on December 31 is the one that counts. If farming or fishing is your main source of income, you may also have to pay instalments, on a different schedule (see the due dates below). The CRA publishes a calculation chart for 2026 instalments to help you estimate your net tax owing. If you get a reminder but your 2026 net tax owing will be $3,000 or less, you don't have to pay. Self-employment income and rental income are two of the situations the CRA mentions.

Instalment reminders

The CRA sends instalment reminders (form INNS1) to people who will likely have to pay. The February reminder covers the March and June payments, and the August reminder covers September and December. Each one suggests an amount and lists the calculation options, and you can see them in your CRA account. A remittance voucher comes with the reminder package unless you pay by pre-authorized debit, and each February you get a summary (form INNS2) of what you paid.

Three ways to work out the amount

• No-calculation option. Pay what the reminders say. The CRA bases it on your latest assessed return. It suits people whose income, deductions and credits stay about the same from year to year.
• Prior-year option. Base the payments on your 2025 return. It suits a 2026 that looks like 2025 but differs a lot from 2024.
• Current-year option. Estimate your 2026 net tax owing, plus any CPP contributions and voluntary EI premiums payable. It suits a 2026 that differs a lot from both 2025 and 2024.

With the prior-year and current-year options, the CRA won't charge instalment interest or a penalty if you pay in full by the due dates, unless your estimates were too low. That's the risk with estimating.

You can also shrink or eliminate instalments by having more tax withheld at source. For EI or employer pension benefits, the CRA points you to Form TD1, sent to your employer or pension plan administrator. For OAS or CPP, send Service Canada form ISP3520OAS or ISP3520CPP. Tax can't be withheld from self-employment, investment or rental income, or capital gains. Our Ask Clint answer on asking your employer to take extra tax off each cheque goes into this.

Due dates

If a due date falls on a Saturday, Sunday or a public holiday the CRA recognizes, your payment is on time if the CRA receives it on the next business day. Farmers and fishers have one due date, December 31. If someone who pays by instalments dies during the year, payments due on or after the date of death don't have to be made. The CRA doesn't send a receipt right away, so keep proof of payment, and allow 3 business days for online payments or 10 for a cheque or money order before checking your account.

Interest and the penalty

You're charged instalment interest if you had to pay instalments for 2026, got a 2026 reminder showing an amount to pay, and paid late, paid too little or didn't pay. It's compounded daily at the prescribed rate, which can change every three months. The CRA works out interest on the instalments you should have paid (using whichever option gives the least interest), subtracts interest on the payments you did make, and charges the difference if it's more than $25.

The penalty only applies if your 2026 instalment interest is more than $1,000. The CRA takes the higher of $1,000 or 25% of the interest you would have owed with no payments at all, subtracts it from your actual instalment interest, and halves what's left. Paying your next instalment early, or paying extra, earns credit interest that can offset instalment interest for the same year. It isn't refundable.

Corporations

Corporations generally pay monthly. A corporation can pay quarterly if it's a Canadian-controlled private corporation with a perfect compliance history and, together with associated corporations, had taxable income of $500,000 or less and taxable capital employed in Canada of $10 million or less for the current or previous tax year. Instalments aren't required for most corporate taxes in the first tax year after incorporation, or if tax payable is $3,000 or less for the current or previous tax year. The first payment is due one month less a day (or one quarter less a day, if paying quarterly) after the tax year starts. There's more in our post on corporate tax returns.

How we help

We prepare personal returns, including self-employment and rental income, and we explain what we did in plain English. If a CRA review or letter comes up, our CRA advocacy work includes reading it, gathering the backup and writing the response.