Corporate and personal tax
Tax instalments: how they work for you and for your corporation
Last reviewed: August 2026
How CRA tax instalments work for individuals and for corporations, when each payment is due, and why a CCPC's balance is due long before its T2 return is.
Instalments are the part of the tax system that catches people out quietly. Nobody sends you an invoice, the amounts are easy to ignore, and the consequence shows up months later as interest on a balance you did not know you were carrying. Personal instalments and corporate instalments are two separate regimes with different triggers, different dates and different arithmetic, so it is worth being clear about which one applies to you.
Personal instalments: the $3,000 test
You are required to pay by instalment if your net tax owing is more than $3,000 in the current year and was also more than $3,000 in either of the two previous years. The Quebec figure is $1,800. Net tax owing means the amount left after credits and after tax already withheld at source, so an employee whose payroll deductions cover the bill is generally outside this entirely.
The people it does catch:
- Self-employed and freelance income with no withholding
- Rental income
- Investment income, including dividends from your own corporation
- Anyone drawing from several sources at once, where no single payer is withholding enough
The four due dates are March 15, June 15, September 15 and December 15. Farmers and fishers are on a single December 31 date instead.
The three ways to figure out what to pay
The CRA sends instalment reminders based on your filed returns. If you pay the amounts on those reminders, in full and on time, you will not be charged instalment interest, even if your actual tax bill for the year turns out higher. That is the safe route.
You can also base instalments on your prior year's net tax owing, or on your own estimate of the current year. Both are useful when income has moved. If your income is down sharply, estimating the current year stops you from lending the CRA money for a year. If your income is up sharply, the prior-year option keeps your payments low now and leaves a balance to settle at filing. The catch with either is that if you underestimate, interest is charged back to each missed instalment date.
The arithmetic is simple. A $12,000 annual bill paid in one lump on April 30 is the same money as four payments of $3,000, spread across a year of cash flow you can plan around.
Corporations run on a different clock
Corporate instalments are monthly by default. An eligible small CCPC can pay quarterly instead, which requires claiming the small business deduction, staying within the taxable income and taxable capital thresholds, and having a clean remittance and filing record over the previous twelve months. One late payment can knock a corporation back to monthly, so the compliance history matters more than owners expect.
No instalments are required at all if total tax payable is $3,000 or less in either the current or the previous tax year. A first-year corporation also has no instalment obligation, because there is no prior year to base one on. That is why the second year is so often the one that stings: the first profitable year produces a tax bill, and the year after that produces a tax bill plus twelve instalments on top of it. Building that into the cash flow forecast is part of what our corporate tax work covers before the first year end, rather than after it.
The corporate deadline owners get wrong most
These are two different dates and they are months apart.
| Obligation | When it is due |
|---|---|
| Balance of tax, CCPC claiming the small business deduction | 3 months after year end |
| Balance of tax, all other corporations | 2 months after year end |
| T2 return | 6 months after year end |
A corporation with a December 31 year end that qualifies for the three-month balance-due day has to pay by March 31 and file by June 30. Owners hear "six months to file" and assume the money is due then too. It is not, and interest runs from the balance-due day regardless of when the return goes in. If your December year end return gets finalised in June, three months of interest is already built into it.
To qualify for the three-month window the corporation has to be a CCPC throughout the year, have claimed the small business deduction in the current or a prior year, and have prior-year taxable income within its business limit, counting associated corporations together. Our CRA deadline checker will give you the exact dates for your year end.
What missing them costs
Instalment interest is charged at the prescribed rate for overdue amounts, which sits four percentage points above the base rate the CRA resets each quarter. It is compounded daily and it is not deductible. On top of that, an instalment penalty applies once instalment interest for the year passes a set threshold, so a badly missed year costs more than the interest alone.
There is a useful quirk built into the calculation. Instalment interest is netted, so paying an instalment early earns credit interest that offsets a later shortfall. Catching up in September on a March payment you missed is much cheaper than ignoring it until April.
Making it survive contact with real cash flow
The habit that works is boring. Move a fixed percentage of every deposit into a separate account the day it lands, and pay instalments out of that account only. Owners who do this stop thinking about instalment dates, because the money was never in the operating account to spend.
Review the number mid-year rather than at year end. A business that is down 40% on last year should not be paying instalments built on last year's profit, and a business that has doubled needs to know now that the prior-year option is going to leave a balance owing in the spring. That review is also the point where the salary versus dividend mix is worth revisiting, since how you pay yourself changes whether you have personal instalments at all.
If you are wondering which of the two regimes applies to you, the answer is frequently both. An owner-manager whose corporation pays monthly instalments and who also draws enough in dividends to trigger personal instalments is running two schedules at once, on different dates, out of two different bank accounts. The personal side is the one that gets forgotten, because the CRA reminder for it only arrives after the first year in which it was already required.
All of our corporate and personal tax work
General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.