Understanding Tax Instalments and CRA Payment Requirements

Receiving a notice from the Canada Revenue Agency (CRA) asking you to make tax instalments can be confusing, especially if you’re used to paying your taxes once a year.

For many Canadian small business owners and self-employed individuals, tax instalments are simply a way of paying income tax throughout the year instead of paying a larger amount at tax time.

Understanding when instalments may be required, when payments are due, and how to plan for them can help you manage your cash flow and avoid unexpected interest or penalties.

Tax instalments are periodic payments made toward the income tax you expect to owe for the year.

For individuals, the CRA describes instalments as payments made during the year toward taxes that would otherwise generally be paid in a lump sum the following year. This can commonly affect people who earn income without enough tax withheld at source, including some self-employed individuals.

Think of instalments as prepayments toward your expected tax bill, rather than an additional tax.

For 2026, an individual may have to make instalment payments if their net tax owing is more than $3,000 for 2026 and was also more than $3,000 in either 2025 or 2024. Different thresholds apply to Quebec residents.

The CRA may send an instalment reminder if it appears you will need to make payments. These reminders include suggested payment amounts.

Corporations have different requirements. Generally, corporations must make monthly or quarterly tax instalments, although there are exceptions. For example, instalments generally aren't required when applicable tax payable is $3,000 or less for either the current or previous tax year.

Because requirements depend on your situation and business structure, it’s important to understand which rules apply to you.

For most individuals required to make instalments in 2026, the CRA payment dates are:

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

If a due date falls on a weekend or CRA-recognized public holiday, the payment is considered on time when received on the next business day.

Corporate instalment schedules are different and depend on the corporation’s tax year and whether it qualifies to make monthly or quarterly payments.

Income tax isn’t the only area where instalments may apply.

Businesses that file GST/HST annually may also need to make quarterly instalment payments. Generally, an annual filer whose net tax for the previous fiscal year was $3,000 or more may be required to make instalments, with additional rules depending on the current year and the business’s circumstances.

This is why it’s important not to assume that one CRA payment schedule covers every obligation your business has.

Ignoring an instalment reminder can become expensive.

The CRA may charge instalment interest when required payments are late or insufficient. In some circumstances, an additional instalment penalty may also apply.

Rather than waiting until a payment deadline arrives, build expected tax payments into your business’s cash flow planning.

Setting money aside regularly can make instalment dates much easier to manage.

One of the biggest challenges with taxes isn’t always the amount it’s having the cash available when payment is due.

Consider maintaining a calendar of upcoming CRA deadlines and regularly reviewing:

• Expected income tax obligations
• GST/HST amounts
• Payroll remittances
• Instalment notices
• Available cash for upcoming payments

Accurate bookkeeping also makes it easier to understand how your business is performing and anticipate potential tax obligations.

CRA payment requirements can vary depending on whether you operate as a sole proprietor or corporation, your income, previous tax amounts, and other factors.

At TandemBooks, we help Canadian business owners maintain accurate books, organize their financial information, and prepare for upcoming tax obligations.

Our Specialty Bookkeeping, Income Tax Preparation, and Consulting & Advisory services can help you better understand your numbers and plan ahead for important payment deadlines.

Tax instalments don’t have to come as an unpleasant surprise.

Understanding why instalments are required, knowing your deadlines, maintaining accurate financial records, and planning for payments throughout the year can make CRA obligations easier to manage.

Have questions about your business finances or upcoming tax payments? Contact TandemBooks to learn how our team can help you stay organized and prepared.