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 |