Options to calculate - Required tax instalments for individuals

Options to calculate

You have 3 options to calculate your instalment payments which could help reduce or eliminate the amounts you need to pay.

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Decide which option to use

No-calculation option

This option is best if your income, deductions, and credits stay about the same from year to year.

The CRA determines the amount of your instalment payments based on the information from your latest assessed tax return. The amount for the no-calculation option will be indicated on the instalment reminders that we send you.

Prior-year option

This option is best if your 2021 income, deductions, and credits will be similar to your 2020 amount, but significantly different from those in 2019.

You determine the amount of your instalment payments based on the information from your tax return for the 2020 tax year. Use the calculation chart for instalment payments for 2021 (PDF) to help you calculate your total instalment amount due.

If you make your payments in full by the 2021 due dates, we will not charge instalment interest or a penalty, unless your estimated instalment amounts are too low.

Current-year option

This option is best if your 2021 income, deductions, and credits will be significantly different from those in 2020 and 2019.

You determine the amount of your instalment payments based on your estimated current year (2021):

Use the calculation chart for instalment payments for 2021 (PDF) to help you calculate your total instalment amount due.

If you make your payments in full by the 2021 due dates, we will not charge instalment interest or a penalty, unless your estimated instalment amounts are too low.

Reduce or eliminate tax instalment payments

You can reduce or eliminate your instalment payments by having tax withheld or increasing the amount of tax deducted from these sources:

Old age security

Use Request for Voluntary Federal Income Tax Deductions (form ISP3520OAS) and send to a Service Canada office

Canada Pension Plan benefits

Use Request for Income Tax Deductions (form ISP3520CPP) and send to a Service Canada office

Quebec Pension Plan benefits

For details: Retraite Québec

EI or pension benefits (employer-sponsored pension plan)

Use 2021 Personal Tax Credits Return (form TD1), and send to your employer or pension plan administrator

Income tax cannot be withheld from certain types of income, such as self-employment, investment, rental income, and capital gains.

Example – How to eliminate the amount of your instalment payments

Hugh is a resident of Alberta and pays his tax by instalments. His net tax owing has been $3,500 for several years and he expects it will stay the same in 2021.

He decides to have more tax withheld from his income in 2021. In January 2021, Hugh filled out Form TD1 to ask his pension plan administrator to withhold an extra $250 each month from his pension income.

Hugh now estimates his net tax owing will be $500 for 2021. Based on his estimate, he does not have to make instalment payments in 2021 because his net tax owing will not be over $3,000 for 2021. Hugh would disregard the instalment reminders he gets for 2021.

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