Frequently asked questions for Calculate instalment payments

Corporate - If you are a new corporation, you do not have to make instalment payments until you have started your second year of operation.

If you are an existing corporation, you do not have to make instalment payments on your federal taxes if your current or previous year net tax is less than $3,000.

GST/HST - For reporting periods beginning after 2007, if you are an annual filer and your net tax in a fiscal year is $3,000 or more, you have to make equal quarterly instalment payments in the following fiscal year.

Corporate - Instalment bases are calculated according to the part of the federal Income Tax Act that applies to your corporation, as well as your provincial and territorial tax.

Monthly instalment payments are calculated using one of the following options:

Option 1 - One-twelfth of the estimated tax payable for the current tax year is due each month of the tax year.

Option 2 - One-twelfth of the tax payable from the previous tax year is due each month of the current tax year.

Option 3 - One-twelfth of the tax payable from the year before the previous tax year is due in each of the first two months of the current tax year. One-tenth of the difference between the tax for the previous tax year and total of the first two payments is due in each of the remaining 10 months of the current tax year.

Note: We will assess your return using the option that results in the least amount payable by instalments.

Quarterly instalments for an eligible small Canadian-controlled private corporation (CCPC) are calculated using one of the following options:

Option 1 - One-quarter of the estimated tax payable for the current tax year is due each quarter of the tax year.

Option 2 - One-quarter of the tax payable from the previous tax year is due each quarter of the current tax year.

Option 3 - One-quarter of the tax payable from the year before the previous tax year is due the first quarter of the current tax year. One-third of the difference between the tax for the previous tax year and the first payment is due in each of the remaining three quarters of the current tax year.

Note: We will assess your return using the option that results in the least amount payable by instalments.

GST/HST - If you are an annual filer and your net tax for a fiscal year is $3,000 or more, you have to make instalment payments throughout the following fiscal year. Usually, the amount of each equal payment will be one quarter of your previous year's net tax. If you expect that this year's net tax will be less than last year's you may also base your equal quarterly instalment payments on an estimate of your current year's net tax. You will have to pay interest on the difference if your estimate is less than the amount you actually owe at the end of the year.

Corporate - A small CCPC is eligible to make quarterly instalment payments if, at the time the payment is due:

• it has a perfect compliance history
• it has claimed a small business deduction for the current or previous tax year
• together with any associated corporations, for the current or previous tax year
  • it has taxable income of $400,000 or less
  • and it has taxable capital employed in Canada for the tax year of $10 million or less

GST/HST - For reporting periods beginning after 2007, if you are an annual filer and your net tax in a fiscal year is $3,000 or more, you have to make equal quarterly instalment payments in the following fiscal year.

Where a corporation has paid quarterly instalments and ceases at any time in a tax year to be eligible to pay quarterly instalments, then the corporation is still allowed to pay its next instalment due at the end of the current quarter. However, the corporation will have to begin to pay monthly instalments following that quarter.

Example: This example shows how to calculate the required instalment amounts when a corporation is no longer eligible to make quarterly instalments.

Estimated tax payable for the current year is $120,000; divide by 4 equals $30,000.00 in quarterly instalment payments.

120,000 ÷ 4 = $30,000

A corporation ceases to be compliant on May 31, 2015. It is allowed to pay its next instalment due at the end of the current quarter, which is June 30, 2015. The corporation will have to begin to pay monthly instalments starting on July 31, 2015.

The first two instalment payments of $30,000 are due quarterly on March 31 and June 30, 2015. The number of months remaining in the tax year after June 30, 2015, is six.
Formula to calculate remaining monthly instalment payments:

Estimated tax payable for the current year minus total of all instalment payments due quarterly while eligible, divided by the number of months remaining in the tax year.

($120,000 – ($30,000 x 2)) ÷ 6 = $10,000

Therefore, six monthly instalment payments of $10,000 are due on July 31, August 31, September 30, October 31, November 30, and December 31, 2015.

Note: You can also base this calculation on the first instalment base; however, you have to add to your monthly payments any estimated Part VI and XIII.1 tax payable for the current year, divided by the number of months remaining in the tax year.

Corporate - Instalment payments are due on the last day of every complete month of your tax year, or of every complete quarter, if you are an eligible small-CCPC. The first payment is due one month or one quarter minus a day from the starting day of your tax year. The rest of the payments are due on the same day of each month or each quarter that follows. If your payment due date falls on a Saturday, Sunday, or a public holiday, the payment will be considered as having been received on time.

GST/HST - If you have to pay equal quarterly instalments, they are due no later than one month after the last day of each fiscal quarter. When a due date falls on a Saturday, a Sunday, or a public holiday, we consider your payment to be paid on time if we receive it on the next business day.

My Payment - Use the My Payment service to make one or more payments in one simple online transaction using your financial institution's secure online banking service.

Electronically - You can pay online. For information about the different online payment methods, go to Make a payment.

At your financial institution - You can make your payment free of charge at your financial institution in Canada. Present the part of your statement that displays your remittance voucher with your payment to the teller. The teller will return the top part to you as a receipt. You must have an original voucher from the CRA for your financial institution to accept the payment. Photocopies are not accepted.

By mail - You can mail a cheque or money order payable to the Receiver General, along with your completed remittance voucher to the following address.

Canada Revenue Agency
875 Heron Road
Ottawa ON K1A 1B1

We accept post-dated cheques.

You will have to pay interest on the difference if your estimate is less than the amount you actually owe at the end of the year. You will not be charged penalty and interest on any balance owing at the end of the year if:

• you based your instalments on the previous year's net tax
• you paid those instalments in full and on time
• the balance is remitted by the due date

If you are authorized, you can make an online request by accessing the "Order remittance vouchers" Quick Link on the sidebar or:

• return to the My Business Account homepage
• select the Enquiries service
• choose the Order remittance vouchers option

Representatives must have a minimum level 2 authorization to access the Order remittance voucher form.

If an interim balance amount is greater than zero, the text will be hyperlinked on the results page. This hyperlink will display any interim payments received to date, the associated effective date of each and a total for the period end.

Short tax years

Corporate - Your tax year may be less than 12 months. If so, you have to pay one-twelfth or one-tenth of your tax each complete month in the tax year, depending on which calculation option you choose. If you are an eligible small CCPC, you have to pay one-quarter or one-third of your tax each complete quarter in the tax year. You do not have to make an instalment payment for a tax year that is shorter than one month, or in the case of an eligible small CCPC, shorter than one quarter.

GST/HST - If you are an annual filer and your first year of filing for GST/HST is less than a full fiscal year, you need to prorate your net tax for your first short filing year to determine if you will need to make equal quarterly instalment payments in the next fiscal year.

Prorating - Divide the net tax for this first short fiscal year by the number of months in that fiscal year. This will give you an approximate monthly net tax. To estimate the next year's net tax, multiply the monthly net tax by 12. If the estimated amount is $3,000 or more, you need to make instalment payments in the next year.

Fluctuating filing period ending (fiscal period longer than 365 days)

No change to the fiscal period is considered to occur where a corporation follows the practice of ending its fiscal period on a chosen day of the week that is nearest to a certain day of the year, provided that the resulting period does not exceed 53 weeks.

Change of control

If there is a change of control of a corporation under subsection 249(4) of the Income Tax Act, the corporation continues to exist as it was before, for instalment purposes.

Specified future tax consequences

For instalment calculations, the tax payable for a tax year is the total tax payable for the year before taking into consideration the specified future tax consequences for the year. Specified future tax consequences are defined in subsection 248(1) of the Income Tax Act. These include things like loss carry-back, foreign tax credit adjustments, and flow-through share renunciation.

Access is restricted when:

• a subsidiary corporation is wound up into a Canadian parent corporation
• a new corporation is formed by amalgamation
• a corporation has received all or substantially all of the property of another corporation that it does not deal with at arm's length

Your second preceding tax year is not assessed.

In these situations, we cannot complete the calculation online. If you require assistance with your calculation, please refer to the T7B – Corporation Instalment Guide or submit an enquiry. Go to the Homepage and select Enquires service then choose Submit a written enquiry.

For example:

• my records don't agree with the interim balance
• a payment is missing

If you have any questions about the information displayed in the Instalment payment calculator service, you can submit an enquiry. Go to the Homepage and select Enquires service then choose Submit a written enquiry.

You can also call our Business Enquiries line at 1-800-959-5525 or send a written request to your tax centre.

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The CRA login services are available every day; 21 hours a day (see Hours of service).

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