Do you have to pay tax by instalments?
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Why should you pay tax by instalments?
If you earn income that has no tax withheld or does not have enough tax withheld for more than one year, you may have to pay tax by instalments.
This can happen if you earn rental, investment, or self-employment income, certain pension payments, or income from more than one job.
What are the factors to consider?
There are 2 factors to consider when determining if you have to pay tax by instalments:
- your province or territory of residence
- your net tax owing
Province or territory of residence
Your province or territory of residence will determine the threshold of net tax owing that you will use when determining if you have to pay tax by instalments.
If you live in Quebec on December 31 of a year, use a limit of $1,800 of net tax owing.
If you live in any other province or territory on December 31 of a year, use a limit of $3,000 of net tax owing.
Net tax owing
Generally, your net tax owing is the amount you owe on your tax return. The items used to calculate net tax owing (line 16) are listed in the Calculation chart for instalment payments for 2019.
You have to pay your income tax by instalments for 2019 if both of the following apply:
- your net tax owing for 2019 will be above the threshold for your province or territory ($1,800 or $3,000)
- your net tax owing in either 2018 or 2017 was above the threshold for your province or territory
You do not have to pay your income tax by instalments for 2019 if your net tax owing for 2019 will be $3,000 or less ($1,800 or less for residents of Quebec), even if you received an instalment reminder in 2019.
If you received an instalment reminder that shows an amount to pay, you may have to pay your income tax by instalments.
If your main source of income in 2019 is self-employment income from farming or fishing, you must make an instalment payment if both of the following apply:
What is an instalment reminder?
An instalment reminder is sent to help you determine if you have to pay income tax by instalments. The reminder will suggest an amount to pay and list the calculation options.
We send instalment reminders to people who may have to pay tax by instalments:
- The February reminder is for the March and June payments
- The August reminder is for the September and December payments
If you only received an August reminder, see Instalment reminder received in August 2019.
If you received an instalment reminder and you are required to pay instalments but do not comply, you may have interest and penalty charges.
You can also see your instalment reminders online using My Account.
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