If you’ve received a reminder from the CRA about instalment payments, you’re not alone.

June 15 is one of the key instalment deadlines — and understanding how it works can help you avoid interest and penalties.

What Are CRA Instalments?

Instalments are prepayments of your taxes throughout the year.

Instead of paying everything at once, you pay in advance based on prior income.

Who Needs to Pay Instalments?

Generally, if you owe:

  • More than $3,000 in taxes
  • In the current year or either of the previous two years

CRA may require instalments.

How Are Instalments Calculated?

You have three options:

1. No-Calculation Method (CRA Suggested)

Pay the amounts listed in your CRA reminder.

✔ Easiest
❗ May overpay or underpay

2. Prior-Year Method

Base payments on last year’s tax owing.

3. Current-Year Method

Estimate based on your current year income.

✔ Most accurate
❗ Risk of interest if underestimated

What Happens If You Don’t Pay?

CRA may charge:

  • Interest on missed payments
  • Potential penalties if amounts are significantly off

Tips

  • Set aside funds monthly
  • Don’t ignore CRA reminders
  • Review your income trends
  • Ask your accountant if unsure

Final Thoughts

Instalments aren’t extra taxes — they’re just timing of payments.

Handling them properly helps avoid unnecessary costs and keeps you on track. So make that payment before June 15th.

Disclaimer:
The information on this website is provided by Virtual Heights Accounting for general informational purposes only and does not constitute accounting, tax, or legal advice. Canadian tax laws and interpretations may change and vary based on individual circumstances. No professional-client relationship is created by the use of this website. Readers should seek professional advice specific to their situation before acting on any information provided.