For 2026, an individual outside Quebec may need to pay income tax by instalments when net tax owing is more than $3,000 for 2026 and was more than $3,000 in either 2025 or 2024. The threshold is $1,800 for Quebec residents.
Review the CRA instalment requirements each year because the test includes the current year and prior-year amounts.
What net tax owing means
Net tax owing is not the same as business income or the balance on an invoice. It generally reflects tax payable after amounts withheld at source and refundable credits are considered, plus certain CPP and EI amounts.
Self-employed people often reach the threshold because no income tax is withheld from client payments. Employment withholding can reduce net tax owing when someone has both employment and business income.
Instalment dates
Individual income tax instalments are generally due:
| Instalment | Due date |
|---|---|
| First | March 15 |
| Second | June 15 |
| Third | September 15 |
| Fourth | December 15 |
When a due date falls on a Saturday, Sunday, or CRA-recognized public holiday, a payment received on the next business day is considered on time.
Use one CRA calculation option
The CRA provides three calculation options:
- No-calculation option: Pay the amounts shown on the CRA instalment reminders.
- Prior-year option: Calculate payments using the previous year’s net tax owing.
- Current-year option: Calculate payments using the estimated current-year net tax owing.
The no-calculation option can protect against instalment interest when the required amounts are paid on time. The other options can reduce payments when income falls, but an estimate that is too low can result in interest.
Use the CRA’s current instructions for the exact calculation. Do not assume every method is simply the annual amount divided by four.
Interest and penalties
The CRA can charge instalment interest when payments are late or insufficient. The prescribed rate changes quarterly, so use the current CRA prescribed interest rate rather than a fixed percentage quoted in an article.
A separate instalment penalty can also apply when instalment interest for the year exceeds $1,000. Paying the tax balance by April 30 does not erase interest that arose because required instalments were late.
Planning through the year
- Review the CRA reminder and prior returns before March 15.
- Set aside part of each client payment in a separate savings account.
- Re-estimate income before the June and September payments.
- Keep confirmation numbers for every payment.
- Distinguish current-year instalments from a prior-year balance owing.
RRSP deductions and source deductions can change the final net tax owing, but spending money solely to create business expenses is not a tax strategy. Make purchases because the business needs them, then claim the correct treatment.
Accountly can help you record business income and expenses. It does not calculate required income tax instalments or send instalment reminders. Use your CRA notice, tax software, or a qualified professional for the payment amount.
Frequently asked questions
Is owing more than $3,000 once enough to require instalments?
Not by itself. For 2026 outside Quebec, net tax owing must exceed $3,000 for 2026 and for either 2025 or 2024. Quebec uses a $1,800 threshold.
What happens if I miss an instalment?
The CRA may charge instalment interest. A separate penalty can apply when the year’s instalment interest exceeds $1,000.
Do I pay instalments if I also have employment income?
Possibly. The test uses net tax owing after source deductions. Enough tax withheld by an employer may keep net tax owing below the threshold.
Can I pay monthly?
You can make payments early or more frequently, but the CRA evaluates the required amounts against the quarterly due dates. Apply payments to the correct tax year.
Are GST/HST instalments the same?
No. GST/HST instalments use separate rules and accounts. Confirm the requirements for your GST/HST reporting period independently.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.