Do I need to make quarterly tax instalment payments in Ontario?

Instalment payments are required when you owe more than a certain threshold of net tax that is not being withheld at source. This federal rule applies equally to Ontario residents. If your net tax owing (after withholdings) exceeds a threshold in both the current and one of the two prior years, the CRA will require you to make quarterly instalment payments to prepay your estimated tax for the current year.

The four instalment deadlines are March 15, June 15, September 15, and December 15. Missing these deadlines results in instalment interest, which the CRA charges on late or insufficient payments. However, if you ultimately pay everything by the April 30 annual deadline, the interest is only assessed on the instalments themselves, not on the entire tax bill.

Self-employed individuals, investors with significant investment income, and retirees with pension income not subject to withholding are the most common groups required to pay instalments. Employees who have sufficient tax deducted at source through payroll typically do not need to pay instalments unless they have other sources of income. The CRA sends instalment reminders in February and August showing amounts you can use as a safe-harbour calculation. A tax professional can help you set the right instalment amounts to avoid interest.