Penalties and interest. They suck.
They don’t help your business grow. They don’t unlock new opportunities. And they definitely don’t make tax season any more enjoyable. They’re just money quietly leaking out of your business — with nothing to show for it.
And here’s the thing most small business owners don’t realize: almost all CRA penalties and interest are completely avoidable.
Being on time isn’t just about compliance. It’s one of the simplest, most effective ways to protect your profit and keep your cash working where it actually matters — in your business.
Let’s break down why tax deadlines matter, who needs to pay instalments and how a little planning can save you thousands over time.
Why tax deadlines matter more than you think
Missing a CRA deadline doesn’t usually feel dramatic in the moment. There’s no flashing warning light.
Instead, it shows up later — as interest charges, penalties and frustration when you realize you’ve paid more tax than you ever needed to.
A few hard truths:
- CRA interest rates are high — currently around 7%.
- Interest compounds, which means it grows faster than you expect.
- Penalties and interest are pure waste. They don’t improve your business in any way.
Late payments quietly erode profit. And unlike marketing spend, equipment purchases or hiring, there’s no upside.
The good news? With the right planning and communication, this is one of the easiest problems to eliminate.
Who needs to pay CRA instalments?
CRA instalments catch a lot of business owners off guard — especially growing businesses.
In simple terms, instalments are pre-payments of tax. CRA asks you to pay them when your prior-year tax bill shows a pattern of owing money.
Instalments can apply to:
- Corporate income tax
- Personal income tax (for self-employed individuals)
- GST/HST
👉 If you owed more than $3,000 in tax in a prior year, CRA will likely require instalments in the following year.
This applies to both corporate tax and GST in many cases.
CRA bases instalment requirements on past performance, not guesses. If last year was profitable, CRA assumes you’ll be profitable again — and wants payments spread throughout the year instead of all at once.
How instalments actually work
Here’s a common example:
Let’s say your corporation owed $4,000 in tax at the end of last year.
CRA will typically ask you to pay:
- $4,000 ÷ 4 = $1,000 per quarter
- Due at the end of each fiscal quarter
Same idea for GST instalments if you meet the criteria.
One important clarification we often make with clients:
Paying instalments quarterly is not the same as filing quarterly.
Many business owners think they’re on quarterly GST filing, when in reality they’re filing annually — but paying instalments quarterly. That distinction matters, and misunderstanding it is a common source of missed payments.
This is where education and communication with your accountant make a huge difference.
Key CRA deadlines every business owner should know
While every business is a little different, here are some of the big ones that trip people up:
Instalment due dates
- Often quarterly
- Typically required when prior-year tax owing exceeds $3,000
- Applies to corporate tax, personal tax, and sometimes GST
GST/HST payments
- If required to make instalments, GST is usually due one month after each fiscal quarter ends
- Filing frequency and payment frequency aren’t always the same
Corporate tax
- Corporate tax returns are generally due six months after year-end
- But payment is usually due much earlier — often within three months of year-end
T4 deadlines
- As an employer, you’re responsible for issuing T4s on time
- Miss the deadline and penalties start at $100 minimum
Deadlines aren’t complicated, but they are layered. And when you’re focused on running a business, it’s easy for one to slip through the cracks without a clear system.
What happens when you miss a deadline
The consequences are predictable:
- Interest starts immediately and compounds
- Penalties stack on top, especially for late filings
- Cash that could be reinvested is gone for good
We see this most often when there is:
- Poor planning
- Not enough communication with an accountant
- Uncertainty about what’s coming next
The CRA doesn’t care that things were busy. They care that payments arrived on time.
Why being on time helps your business grow
When you stay on top of instalments and deadlines:
- Cash flow becomes predictable
- You avoid surprise tax bills
- More money stays available for:
- Hiring
- Equipment
- Marketing
- Growth opportunities
Instead of scrambling, you’re planning.
There’s also a very real stress reduction that comes from knowing nothing is quietly accruing interest behind the scenes. Less stress leads to better decisions — and better decisions lead to stronger businesses.
How we help clients stay ahead at True North Accounting
At True North Accounting, we believe penalties and interest should be the exception — not the norm.
Here’s how we make that happen:
Proactive planning
At the end of every corporate year-end, we do a full review with our clients. We don’t just file and move on — we explain what’s coming next.
That includes:
- Clear instalment amounts
- Payment schedules
- What to expect for the year ahead
Customized checklists and reminders
We send customized year-end checklists so clients know exactly what’s needed — and when.
There’s back-and-forth. There’s time to adjust. And there’s no guessing.
Accurate estimates
A good estimate matters. When instalments are calculated properly, interest is avoided altogether. That’s the goal — every time.
Real accountability
We believe in this so strongly that if a penalty or interest charge happens because we missed something, we cover it. Period.
That’s how confident we are in our process — and how seriously we take protecting your money.
The bottom line
What if being on time was the easiest way to save money?
Because honestly, it is.
Tax deadlines aren’t just administrative details. They’re a lever you can pull to:
- Protect profit
- Improve cash flow
- Reduce stress
- Reinvest in what actually matters
Don’t give the CRA free money. With a little planning and the right support, you don’t have to.
Book an appointment with us and let’s see how we can help your business run better — not just pay on time.
Read more about Corporate Tax topics relevant to you and your small business.
