Corporate Tax Instalments in Canada: Complete Guide
Updated
A corporation that owes more than $3,000 of tax pays it during the year in instalments, not in one payment after year-end. This guide covers who has to pay, the monthly and quarterly schedules, the three ways to calculate the amounts, the balance-due day and the interest on late instalments. It is part of the corporate, trust and estate tax guides; individuals who pay instalments on their own return have a separate guide to personal tax instalments.
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 for 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)
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
7% (base prescribed rate of 3% + 4%, as of Q4 2026)
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
2.2% on first $500,000 (for taxation years beginning after April 29, 2026; 3.2% before that)
General rate
11.5%
Threshold
Instalments required if QC tax > $3,000
How Much Tax the Instalments Cover
Instalments are based on the corporation’s total tax for the year, so the rate it pays drives the amounts: the federal small business rate on active income up to the business limit, the general rate above it, and a higher, partly refundable rate on investment income. The rates and the rules behind them are in the CCPC tax planning guide.
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 the CRA corporation tax instalments payee
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)