Who Must Pay Instalments
| Situation | Instalments Required? |
|---|
| Current year tax owing > $3,000 (federal) | ✅ Yes |
| Previous year tax owing > $3,000 (federal) | ✅ Yes |
| Tax owing ≤ $3,000 in both current and prior year | ❌ No — pay in full by balance-due day |
| New corporation (first tax year) | ❌ No instalments in first year |
| Tax-exempt organization | ❌ No |
Monthly vs Quarterly Instalments
Monthly (Default — Most Corporations)
| Feature | Detail |
|---|
| Who | All corporations not eligible for quarterly |
| Due dates | Last day of each month of the fiscal year |
| Number of payments | 12 per year |
| Balance-due day | 2 months after fiscal year-end (3 months for eligible CCPCs) |
Quarterly (Eligible CCPCs Only)
| Requirement | Detail |
|---|
| Must be a CCPC | Canadian-controlled private corporation |
| Small business deduction claimed | In the previous tax year |
| Taxable income | Under $500,000 in prior year |
| Taxable capital | Under $10 million |
| Perfect compliance | No outstanding returns or balances |
| Due dates | Last day of each fiscal quarter |
| Number of payments | 4 per year |
Quarterly Due Dates (Calendar Year-End)
| Quarter | Period | Due Date |
|---|
| Q1 | January–March | March 31 |
| Q2 | April–June | June 30 |
| Q3 | July–September | September 30 |
| Q4 | October–December | December 31 |
Three Methods to Calculate Instalments
| Method | How It’s Calculated | Best When |
|---|
| Current-year method | 1/12 (or 1/4) of estimated current-year tax | You can accurately estimate this year’s tax |
| Prior-year method | 1/12 (or 1/4) of prior year’s total tax | Income is similar year-over-year |
| Two-year method | First 2 payments based on second prior year; remaining 10 based on prior year minus first 2 | Income is growing — reduces early payments |
Calculation Example: Prior-Year Method
Corporation with $60,000 total tax owing last year, monthly instalments:
| Metric | Calculation |
|---|
| Annual tax | $60,000 |
| Monthly instalment | $60,000 ÷ 12 = $5,000 |
| Due | Last day of each month |
Calculation Example: Two-Year Method
$40,000 tax in second prior year; $60,000 tax in prior year:
| Payment | Based On | Amount |
|---|
| Months 1–2 | 1/12 of second prior year ($40,000) | $3,333/month |
| Months 3–12 | ($60,000 − $6,666) ÷ 10 | $5,333/month |
| Total | | $60,000 |
Balance-Due Day
| Corporation Type | Balance-Due Day |
|---|
| Most corporations | 2 months after fiscal year-end |
| Eligible CCPCs (small business deduction) | 3 months after fiscal year-end |
| Calendar year-end (most corps) | February 28/29 |
| Calendar year-end (eligible CCPCs) | March 31 |
Any remaining tax owing after instalments must be paid by the balance-due day.
Penalties and Interest
Instalment Interest
| Factor | Detail |
|---|
| Rate | CRA prescribed rate + 4% (updated quarterly) |
| Current approximate rate | 8–10% |
| Calculated on | Each late or insufficient instalment payment |
| From | Instalment due date |
| To | Earlier of: payment date or balance-due day |
Instalment Penalty
| Condition | Penalty |
|---|
| Instalment interest > $1,000 | Penalty may apply |
| Penalty amount | 50% of (instalment interest minus the greater of $1,000 or 25% of instalment interest had no instalments been made) |
| In practice | Only applies to significant shortfalls or negligence |
How to Avoid Penalties
| Strategy | Detail |
|---|
| Pay on time | Set up automatic payments through CRA My Business Account |
| Use the CRA’s instalment reminders | CRA sends instalment notices with suggested amounts |
| Use the method that results in lowest payments | CRA allows whichever method results in no interest |
| Top up before balance-due day | Pay any shortfall before the deadline |
| Offset with prior overpayments | Overpayments in earlier instalments offset later shortfalls |
Federal vs Provincial Instalments
| Province | Combined or Separate? | Detail |
|---|
| Alberta | Separate | File and pay Alberta corporate tax separately to TRA |
| Quebec | Separate | File and pay Quebec corporate tax to Revenu Québec |
| All other provinces | Combined | Federal return includes provincial tax; instalments cover both |
Alberta Corporate Tax
| Feature | Detail |
|---|
| Filed with | Tax and Revenue Administration (TRA) |
| Instalment rules | Similar to federal — monthly or quarterly |
| Small business rate | 2% on first $500,000 |
| General rate | 8% |
| Balance-due day | 2–3 months after year-end (same timing as federal) |
Quebec Corporate Tax
| Feature | Detail |
|---|
| Filed with | Revenu Québec |
| Instalment rules | Monthly, based on estimated provincial tax |
| Small business rate | 3.2% on first $500,000 |
| General rate | 11.5% |
| Threshold | Instalments required if QC tax > $3,000 |
Corporate Tax Rates Quick Reference
| Income | Federal Rate | Small Business Rate (CCPC) |
|---|
| First $500,000 (active business, CCPC) | 9% | 9% (after SBD) |
| Above $500,000 (or non-CCPC) | 15% | N/A |
| Investment income in CCPC | 38.67% (refundable portion) | N/A |
Setting Up Instalment Payments
| Method | How |
|---|
| CRA My Business Account | Schedule payments online |
| Pre-authorized debit (PAD) | Set up automatic monthly/quarterly payments |
| Online banking (bill payment) | Pay to “CRA — Corporation Tax Instalments” |
| Cheque | Mail to CRA with remittance voucher (RC160) |
Annual Compliance Calendar (Calendar Year-End)
| Date | Action |
|---|
| Jan 31 | January instalment due |
| Feb 28/29 | February instalment + balance-due day (non-CCPC) |
| Mar 31 | March instalment + balance-due day (eligible CCPC) |
| Apr 30 | April instalment |
| May 31 | May instalment |
| Jun 30 | June instalment + T2 return filing deadline (6 months after year-end) |
| Jul 31 | July instalment |
| Aug 31 | August instalment |
| Sep 30 | September instalment |
| Oct 31 | October instalment |
| Nov 30 | November instalment |
| Dec 31 | December instalment |