Do I need to make quarterly tax instalments as a self-employed person?
The CRA requires quarterly tax instalments if your net tax owing — federal and provincial combined — exceeds a threshold for the current and either of the two preceding tax years. The CRA typically sends instalment reminders if you meet this threshold, but even if you don't receive a reminder, the obligation may still apply.
Instalments are due four times a year: March 15, June 15, September 15, and December 15. Missing or underpaying instalments can result in interest charges, even if you pay the full balance by April 30. The CRA offers three methods to calculate instalments: the prior year's tax, the current year's estimated tax, or an no-calculation option using the amount on the CRA's reminder notice.
For most self-employed Ontarians, the simplest approach is to set aside a regular percentage of gross revenue throughout the year and remit instalments on schedule. Speaking with a tax accountant or lawyer at the start of the year can help you avoid surprises.
Key takeaways
- Quarterly instalments are required when your balance owing exceeds a CRA threshold over two years.
- Due dates are March 15, June 15, September 15, and December 15.
- Underpaying instalments results in CRA interest charges.
- The CRA offers three calculation methods; the notice method is the simplest for most people.