Quarterly tax instalments are required when net tax owing exceeds $3,000 ($1,800 in Quebec) in the current year and either of the two prior years. Most employees never pay instalments because tax is withheld at source. Self-employed Canadians, retirees living on RRIF/CPP/OAS without enough withholding, landlords with positive rental income, and investors with significant non-registered investment income are the typical instalment payers. Instalments are due March 15, June 15, September 15, and December 15. Missing or underpaying triggers instalment interest at the prescribed rate plus a possible penalty.
Who has to pay instalments
| Test | Threshold (rest of Canada) | Threshold (Quebec) |
|---|---|---|
| Net tax owing in current year | More than $3,000 | More than $1,800 |
| Net tax owing in either of the two prior years | More than $3,000 | More than $1,800 |
Both tests must be true for the requirement to apply. “Net tax owing” is total tax minus tax already paid (withholding, prior instalments, refundable credits). A taxpayer with $30,000 of withholding and $3,000 of additional balance owing has $3,000 of net tax owing, even though gross tax is much higher.
The four payment dates
| Quarter | Due date |
|---|---|
| Q1 | March 15 |
| Q2 | June 15 |
| Q3 | September 15 |
| Q4 | December 15 |
If the date falls on a weekend or holiday, the payment is due the next business day. Late payments accrue instalment interest from the original due date.
Three calculation methods
You can use whichever method results in the lowest legal payment.
| Method | How it works | When it is best |
|---|---|---|
| No-calculation method | CRA mails a reminder twice a year listing the amounts to pay. Based on the second-prior year’s tax for the first two payments, then the prior year’s tax minus the first two payments for the last two. | Default. Use if income and tax are stable year-to-year. |
| Prior-year option | Pay 25% of the prior year’s net tax owing each quarter. | Income is rising; prior year’s tax is lower than the current year’s expected tax. |
| Current-year option | Estimate the current year’s net tax and pay 25% each quarter. | Income is dropping or income is irregular. |
The no-calculation amount is “deemed payable” — pay it and CRA will not charge instalment interest, even if the actual current-year tax is higher.
Instalment interest and penalty
Instalment interest accrues at the prescribed rate (9 percent on overdue tax in Q2 2026) on any underpaid amount, calculated daily. The interest is reduced by interest CRA owes you on overpayments and is offset against the next instalment. An instalment penalty applies under section 163.1 only when:
- Total instalment interest for the year exceeds $1,000, AND
- The penalty equals 25 percent of the lesser of (instalment interest charged minus $1,000) and (instalment interest that would have been charged using the no-calculation method).
For typical taxpayers below this threshold, the consequence of missing instalments is just the interest, not the additional penalty.
Worked example: retiree with RRIF and CPP
A 73-year-old retiree’s 2025 income: CPP $14,000 (no withholding), OAS $9,000 (5% withholding), RRIF $48,000 (10% withholding on minimum-only portion), pension $30,000 (15% withholding). Total income $101,000. Total tax owing approximately $20,000. Total tax withheld approximately $11,500. Net tax owing on April 30, 2026: $8,500.
- Net tax owing exceeds $3,000 in 2025; assume similar pattern in 2024. Instalment requirement triggered for 2026.
- No-calculation method: CRA mails an instalment reminder in February 2026 showing March 15 and June 15 amounts based on 2024 tax. September 15 and December 15 are recalculated using 2025 tax minus the first two payments.
- Total 2026 instalments approximately $8,500 spread over 4 dates ($2,125 each).
- Easiest implementation: log into CRA My Account, set up pre-authorized debit on the reminder amounts, forget about it.
How to actually pay instalments
| Method | Detail |
|---|---|
| Online banking | Use payee “CRA Personal Income Tax — Instalment” with your SIN as the account number |
| Pre-authorized debit through CRA My Account | Schedule one-time payments for each due date or set up recurring debit |
| Cheque to CRA | Allow 7-10 days for processing; not recommended close to deadlines |
Common mistakes
- Paying instalments only after receiving a CRA reminder. Reminders are mailed twice a year, but the obligation begins when income/tax pattern triggers it.
- Using the wrong CRA payee (Income Tax instead of Income Tax — Instalment). Posting to the wrong account leaves the instalment account showing zero.
- Skipping instalments because “I’ll pay it all on April 30.” Doing so triggers instalment interest from each quarterly due date.
- Forgetting that the current-year option requires accurate forecasting. Underestimating the current year and underpaying triggers interest.
- Not increasing source withholding when income changes. Asking RRIF or RRSP issuers to withhold extra (Form T1213) reduces or eliminates instalment requirements.
Reducing instalment requirements
If most of your income is pension, RRIF, or RRSP withdrawals, you can request additional withholding from the payer to bring net tax owing below $3,000. Use Form T1213 to authorize extra withholding from a specific payer. This is often simpler than calculating and paying quarterly instalments.
Cross-references
- How to Pay CRA: All Methods
- CRA Payment Arrangement
- Late Filing Penalty + Interest
- Sole Proprietor Taxes in Canada
Frequently asked questions
- Who has to pay quarterly tax instalments in Canada?
- Anyone whose net tax owing exceeds $3,000 ($1,800 in Quebec) in the current year and in either of the two prior years. Most employees do not because withholding usually covers their tax.
- When are tax instalments due?
- March 15, June 15, September 15, and December 15. If the date falls on a weekend or holiday, payment is due the next business day.
- What are the three instalment calculation options?
- No-calculation method (use the amounts on CRA's reminder), prior-year option (25 percent of prior year's net tax each quarter), and current-year option (estimate current year and pay 25 percent each quarter).
- What happens if I miss an instalment?
- Instalment interest accrues at the prescribed rate (9 percent in Q2 2026) on the underpaid amount. An additional penalty applies under section 163.1 only if total instalment interest exceeds $1,000.
- Can I avoid instalments by increasing payroll withholding?
- Yes, where applicable. Request additional withholding from RRIF, pension, or wage payers using Form T1213 (or equivalent). If extra withholding brings net tax owing below $3,000, the instalment requirement disappears.
- What is the no-calculation method?
- CRA mails a reminder twice a year showing the amounts due. Paying those amounts on time eliminates instalment interest, even if your actual current-year tax is higher.
- How do I pay instalments?
- Online banking using payee "CRA Personal Income Tax — Instalment" with your SIN, or by pre-authorized debit through CRA My Account.