By OptiVal Editorial Desk
If you earn income with no tax taken off, the CRA does not wait until April to collect its share. Once your tax bill gets big enough, you have to pay it in quarterly instalments through the year. CRA instalment payments are one of the least understood obligations in the Canadian tax system, and getting them wrong costs real money: the CRA charges interest at 7% per year, compounded daily, from each missed due date. This guide covers who has to pay, the 2026 due dates, the three legal ways to calculate your amounts, and how to stay out of interest trouble.
Who has to pay tax instalments?
The rule is simple on paper. You must pay instalments for 2026 if your net tax owing will be more than $3,000 for 2026, and was also more than $3,000 in either 2025 or 2024. In Quebec the federal threshold is $1,800, and Revenu Quebec runs the provincial side separately.
Net tax owing is what is left after source deductions. It is your total tax for the year minus tax withheld at source and refundable credits. That definition is why salaried employees almost never get pulled into the instalment system: tax comes off every paycheque, so there is rarely $3,000 left owing. The people who do get pulled in:
- Self-employed and freelance workers with no withholding
- Incorporated owners drawing dividends (no tax is withheld from most dividends)
- Landlords with rental income
- Anyone with a large capital gain in a year
- Retirees drawing pensions or RRIF payments with too little withheld, a classic surprise trigger
One detail that trips people up: the threshold has to be met twice. If your net tax owing was under $3,000 in both 2024 and 2025, a big bill in 2026 alone does not force you into instalments this year. But that big 2026 bill does set you up for 2027, which is exactly how most people discover the system.
The CRA usually sends an instalment reminder in February or March if its records suggest you qualify. Treat that letter as a bill with a schedule, not junk mail. And note that the obligation exists whether or not the letter reaches you.
2026 CRA instalment due dates
Individual instalments are quarterly:
- March 15, 2026
- June 15, 2026
- September 15, 2026 (just passed)
- December 15, 2026 (the next one)
If a due date falls on a weekend or holiday, payment is on time if it reaches the CRA by the next business day. Farmers and fishers are the exception: one instalment for the year, due December 31.
December 15 is the most commonly missed date, partly because it is easy to assume the year is done. It is not. Interest starts running from that date on any shortfall, even if you pay the full balance when you file in April.
One more timing point: the payment has to reach the CRA by the due date, not just leave your bank account. Online banking payments to the CRA typically need one to three business days. Pay a few days early, or use CRA My Account, where payments post faster.
The three ways to calculate your quarterly amounts
You are allowed to choose whichever of these three methods gives you the lowest payments:
1. The no-calculation option. Pay the amounts printed on the CRA instalment reminder. This is the safe harbour. If you pay those amounts on time, the CRA will not charge you instalment interest or penalties, even if your actual tax ends up different.
2. The prior-year option. Take last year’s net tax owing and divide by four. This works well when this year’s income looks similar to last year’s, or higher.
3. The current-year option. Estimate this year’s net tax owing and divide by four. This is the right choice when your income has dropped: a bad year, a business slowdown, a one-time gain last year that will not repeat. The catch is that you are guessing. If you guess too low, instalment interest applies to the shortfall.
A common strategy: use the no-calculation option for the first two quarters, then reassess in the fall. If income fell off, switch to the current-year method for September and December. Just make sure the total you have paid across the four quarters still covers what you actually owe, because interest is calculated quarter by quarter.
What happens if you miss or underpay
This is the part that stings. Instalment interest runs from each missed due date, not from the April 30 filing deadline. Skip the March instalment and pay everything in April when you file, and you still owe roughly a month of interest on that March amount.
The rate is the CRA prescribed rate for tax debts: 7% per year for both the third and fourth quarters of 2026 (unchanged since the third quarter of 2025), compounded daily. The CRA sets these rates quarterly; the current rules are published on the required tax instalments for individuals page.
If your instalment interest for the year climbs past $1,000, the CRA can add a penalty on top: half of the amount above $1,000 (the legislation has a technical 25% floor calculation, but $1,000 is the practical trigger for most people).
Two pieces of good news. First, early or extra instalments can offset late ones in the interest calculation, which is another reason to pay early when cash allows. Check your notice of assessment or CRA My Account to see how it was applied. Second, every instalment you pay is credited against your total tax for the year when you file. Overpay and the excess comes back as a refund or gets applied to next year’s instalments.
Corporations pay monthly, not quarterly
If you run an incorporated business, the rules are different. Corporations generally pay instalments monthly, due on the last day of each month, once their taxes payable exceed $3,000. Eligible small Canadian-controlled private corporations with a clean compliance record may qualify to pay quarterly instead. That is a separate rulebook from the individual system above, and it is worth confirming with your accountant which schedule applies to your company. Our T2 corporate tax deadline guide covers the filing and payment dates in detail.
How to actually pay
The simplest routes: CRA My Account (My Payment), online banking with the CRA as payee using your SIN as the account number, or pre-authorized debit set up in My Account. Whatever method you use, apply the payment to the instalment account for the correct year, and keep the confirmation. Misapplied payments are a needlessly common headache.
Four habits that keep you out of trouble
Treat the February reminder as a calendar event. The moment the CRA instalment letter arrives, put all four dates in your calendar with a reminder a week ahead.
Set the money aside as you earn it. When an invoice is paid or a dividend is declared, move a slice to a separate account. The exact slice depends on your marginal rate, but the habit matters more than the precision.
Revisit your estimate in the fall. Income changes. A method that made sense in March can be wrong by October. The current-year option exists for exactly this situation.
Never skip December 15. It is the easiest date to forget and the one most likely to generate a nasty interest line on your notice of assessment.
Instalments feel like a penalty, but they are really just timing: paying your tax as you earn the income, the way employees do through payroll. The system only hurts when it surprises you.
If instalments are new to you this year, or your income changed and you are not sure which calculation method to use, we can run the numbers and set up a schedule that keeps you clear of interest. T1 preparation starts at $89, and a one-hour consulting session ($125) is usually enough to sort out an instalment plan for the year ahead. Book a free consultation and we will take it from there.
