Calculating instalments of Part XII.3 tax

Life insurers may have to pay tax under Part XII.3 [section 211.1]. The amount of tax you may have to pay is 15% of your taxable Canadian life investment income for the year.

Arrears and refund interest apply to Part XII.3.

Calculate each instalment payment as one-twelfth (1/12) of the lesser of:

  • the estimated Part XII.3 tax payable for the current tax year
  • the Part XII.3 tax payable for the previous tax year

Use Form T901, Remittance Voucher, to make your instalment payments under Part XII.3. The remaining tax, if any, is due on or before your balance-due day.

Note

If you use the estimated Part XII.3 tax payable for the current tax year to determine your instalment payments and the actual amount is greater than your estimate, you may not have made the required monthly instalments. If so, you may be charged interest.

If your Part XII.3 tax is $3,000 or less in the current or previous year, you do not have to make instalment payments on this tax.

Reporting Part XII.3 tax

Report the Part XII.3 tax you owe on Form T2142, Part XII.3 Tax Return – Tax on Investment Income of Life Insurers. We should receive the return no later than six months after the end of your tax year.

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