A Guide to Paying Your Tax by Instalments
If you happen to be a self-employed individual, your wages may not involve taxes. However, according to the tax laws in Canada, every self-employed individual who belongs to the tax bracket is required to pay tax by instalments.
As a matter of fact, there are some vital aspects pertaining to the filing and payment of CRA taxes by instalments which you should know. These are discussed below.
Who are Required to Pay Taxes by Instalments?
People who collect their wages without any tax deductions are required to pay their taxes by instalments. Self-employed earning individuals who generate income from investment or rental, pension payments or from multiple jobs (from two or more jobs) belong to this category. However, an important point to keep it mind is that it also includes people whose taxes are not sufficiently withheld within a year.
How to Find Out If You are Required to Pay Your Tax by Instalments?
Before figuring out whether or not you should pay out your tax by instalments, you should have the following information:
- Province of residence
- Net tax owing
With the above information at your fingertips, you are ready to determine if you should pay your tax by instalments. Consider paying your tax by instalments if the below-mentioned factors apply in your case.
- Net outstanding tax for the current year is above the threshold of your province of residence
- Your net tax for the last two years were above the threshold for your territory of residence
If your owing for the current year happens to be equal to or less than $3,000, the requirement to pay taxes by instalment does not apply to you. For residents of Quebec, the margin is $1,800. However, some specific requirements exist for those who generate income from farming or fishing. It is a good idea to consult a qualified tax professional to gain a better understanding of tax requirements if you generate income from farming or fishing as it is a little complicated.
The Due Date for Tax Instalments
Generally, tax instalments are due on the following dates:
- March 15
- June 15
- September 15
- December 15
The CRA sends instalment reminders to select taxpayers. Generally, it sends instalment reminders to select taxpayers in the following ways:
- February for the tax payments to be made in March and June
- August for the tax payments to be made in September and December
If you have questions regarding CRA taxes get in touch with our business advisors in North York Ontario.