When does my corporation have to pay tax instalments?
Once your corporation owes more than $3,000 in tax for the year, CRA generally expects instalments through the year instead of one payment at year-end.
Instalments are prepayments of this year’s corporate tax. The trigger: if your corporation’s tax bill is more than $3,000 in either the current or previous year, CRA expects payments through the year — monthly for most corporations, quarterly for small CCPCs with a clean compliance record.
How the amounts are set
CRA offers calculation options based on your current-year estimate or prior-year tax, and you can use whichever produces the lowest payments. Miss or short-pay them and CRA charges instalment interest — and potentially a penalty when the interest gets large.
Why owners get surprised
The first profitable year is the classic trap: no instalments were required last year, so nothing was paid — then the year-end bill arrives together with the next year’s instalment schedule. Two years of tax land in one season.
The fix is visibility
With books current all year, your accountant can see the tax building and set money aside monthly — which is exactly what the taxifi dashboard’s “what you owe CRA” number is for.
This is general information, not tax advice for your situation. Book a call and a Canadian accountant will give you the answer for your business.
Common questions
What happens if I skip my instalments?
CRA charges instalment interest on the shortfall, and a penalty on top when that interest exceeds a threshold. It is cheaper to pay on schedule — or to have the amounts set aside monthly so the schedule is painless.
Can my instalments go down if this year is worse than last year?
Yes. You can base instalments on your current-year estimate. If you overpay, it comes back at filing; if you underestimate, interest applies — so estimate with your accountant, not optimism.