Do I have to pay tax instalments?

Dear Mr. Godbout:

I am contacting you because, for the first time, I have received a notice by mail from the Canada Revenue Agency concerning the opportunity (or requirement) to pay my income tax by instalments in 2012 if my net tax owing for the year is greater than C$1,800. Given that the first payment deadline is relatively close (September 15, 2012), I would like to know:
– if I have received this document due to my recent change of status (permanent resident since late June 2012);
– if I have to pay the first instalment on September 15 even if I do not know the net income tax that I will have to pay for the year 2012.

I thank you in advance for this valuable information.



Dear Mr. XXXXX:

I hope that you are well.

You are required to pay tax instalments, not because of your permanent residence status, but rather because you had to pay more than $1,800 in income tax last year as well as one of the two previous years.

If you do not pay instalments and your income tax for 2012 exceeds $1,800, interest will be charged on the instalments from the requested payment deadlines, not just from April 30, 2013. Penalties may also be added to this amount.

It is important that you correctly estimate if the income tax that you will have to pay will be similar to last year’s amount  or higher. If this is the case, pay instalments.

You can even pay instalments that are higher than those requested if you estimate that your income tax will exceed the total amount of the instalments. However, I recommend that you discuss the matter with us to determine if this is to your advantage.

If the estimated income tax that you will have to pay is less than $1,800, please contact us to prepare a strategy.

Also, please note that the instalments are refundable if your actual income tax ends up being lower than the total amount that you have paid in instalments.

I strongly recommend that you contact us because there are three ways to calculate tax instalments.

We can also help you correctly estimate the income tax that you will have to pay for the next year.

Kind regards,

Nicolas Godbout, tax expert and accounting specialist

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