2017-03-29 00:00:00 Taxes English Learn what instalment tax payments are, who has to pay them, when payments are due, how to pay them online and what happens if you don't... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/06/08214023/Accountant-on-smartphone-in-office-processing-tax-installments.jpg Avoid Interest and Penalties by Paying Taxes in Instalments

Avoid Interest and Penalties by Paying Taxes in Instalments

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An instalment tax payment is a partial payment of the taxes you owe for the year. Instalments are calculated using your federal income tax and provincial or territorial tax. In Canada, the Income Tax Act requires most corporations to pay taxes in either monthly or quarterly instalments. Penalties and interest accrue for companies that neglect tax instalment deadlines. Use Form T2WS2 to calculate monthly instalment payments and Form T2WS3 to calculate quarterly payments. Not all corporations have to make instalment payments. For example, a new corporation doesn’t have to start making payments until its second year. The first tax year begins on the anniversary of the incorporation date. You also don’t have to pay instalment payments if your taxes payable are $3,000 or less. Finally, you are not required to make instalment payments in a tax year that is shorter than one month or quarter; this is an extremely rare case. Instalment payments are due on the last day of the month or quarter. The first payment is due one month or quarter from the start of your tax year. If your tax year starts on January 1 and ends on December 31, the first monthly payment is due on January 31, and the first quarterly payment is due on March 31. When in doubt, confirm instalment due dates by accessing the Calculate Instalment Payments service through the CRA’s My Business Account web page. You can also pay interest and penalties through your My Business Account. The CRA charges instalment interest and penalties when you make late payments. Penalties may accrue when interest is more than $1,000.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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