📊 Options to Calculate Income Tax Instalments – Canada Revenue Agency

This page explains how individuals can calculate quarterly or periodic income tax instalment payments to the Canada Revenue Agency (CRA). If your current tax withholding is not enough to cover your tax owing, or you earn income not subject to withholding (self-employment, rental income, investments), you may have to make instalments.

🧠 Three Ways to Calculate Instalment Amounts

You may choose one of the following options when calculating instalment payments:

  1. 👤 No-calculation option
  2. 📆 Prior-year option
  3. 📈 Current-year option

Choosing the right option can help reduce or even eliminate interest or penalty charges if you pay the correct amounts by the due dates.

1. 👤 No-Calculation Option

This option is best when your income, deductions and credits remain relatively stable year over year. The CRA uses information from your latest assessed return to calculate instalments — you simply pay what the CRA suggests on your instalment reminders. If you make these payments on time, no instalment interest will be charged.

2. 📆 Prior-Year Option

Under this option, you calculate instalments based on your tax information from the previous year (for example, use your 2025 tax return to determine payments in 2026). This can be useful if your income this year is similar to last year but differs from the year before.

  • Use the CRA instalment calculation chart for the relevant tax year to compute totals.

3. 📈 Current-Year Option

This option allows you to estimate your own instalments for the current tax year. Use your projected net tax owing, CPP contributions and any voluntary EI premiums to estimate the total instalment amount due.

  • Best suited if you expect income, deductions or credits to differ significantly from prior years.
  • Use the same CRA instalment calculation chart to help estimate your total amount.

📅 Tax Instalment Due Dates

Generally, for individuals the quarterly instalment due dates are:

  • March 15
  • June 15
  • September 15
  • December 15

For farmers and fishers, special rules apply and may result in a single instalment payment by December 31.

💡 Reduce or Eliminate Instalment Payments

You can reduce or stop your instalments by increasing tax withheld at source. This is done by:

  • Submitting a Request for Voluntary Federal Income Tax Deductions (form ISP3520OAS) for Old Age Security.
  • Submitting Request for Income Tax Deductions (form ISP3520CPP) for Canada Pension Plan benefits.
  • Using a TD1 Personal Tax Credits Return to ask your employer or pension plan to withhold more tax.

Note that you cannot withhold income tax from some types of income such as self-employment earnings, investment income or rental income.

📌 Practical Context & Tax Authority Tips

If your net tax owing is above the CRA threshold — generally more than $3,000 (or $1,800 if you live in Quebec) in 2 of the last 3 years — you may be required to pay instalments.

Interest is charged if you underpay instalments. If you consistently use the no-calculation amount suggested by CRA, instalment interest will not apply even if your final tax owing is different from the installed amounts.

When due dates fall on a weekend or statutory holiday, CRA considers payments made on the next business day on time.

📘 Summary

  • No-calculation: Let CRA calculate, good for stable income.
  • Prior-year: Based on last year’s tax figures.
  • Current-year: Your estimate for the year, works for changing incomes.