As a business owner, knowing how and when to pay your taxes is as important as knowing how much to pay. Instalments are progress payments towards your next tax bill, and the cost of ignoring them is getting higher.
Here’s what you need to know about tax payments in 2025 — what types there are, how to figure out what you owe, and when to pay up.
Personal tax instalments
Personal tax instalments apply to you if you’re not on payroll or if you have additional income in addition to payroll and you owed more than $3,000 in taxes on your personal return last year. If this is you, you must make quarterly instalments to prepay your tax bill for the upcoming year.
Your instalments are based on last year’s tax bill. If you expect your 2025 tax bill to be similar to 2024, take your 2024 tax owing and divide it into four equal payments. Adjust as needed if you expect your income to change.
Due dates: March 15, June 15, September 15, and December 15 (or the next business day if it falls on a weekend or holiday). If you’ve missed the first couple of payments, you can catch up with your third payment.
Corporate tax instalments
If your corporation owed more than $3,000 in tax last year, you need to make quarterly instalments this year. Take last year’s tax owing, divide by four, and pay that amount each quarter. If your compliance history isn’t great, the CRA may require you to pay monthly.
Due dates: Quarterly or monthly, depending on CRA’s requirements.
GST instalments
If your business owes over $3,000 in GST, you must make quarterly instalments. Take what you owed last year and divide it by four (e.g., if you owed $8,000 in 2024, you’d pay $2,000 quarterly in 2025).
If you expect to owe less, you can base your payments on your best estimate, but be careful — if you underpay, CRA charges interest on the shortfall.
Due dates: Within one month after the end of each quarter. If your year-end is June 30, your first quarter runs from July 1 to September 30, and your GST instalment is due October 31.
Note: If you do over $1.5 million in sales, you’ll be required to move to quarterly GST filing and if you breach $6 million in Sales, you’ll be moved to monthly.
Payroll remittance instalments
Payroll remittances cover the income tax, CPP, and EI you withhold from your employees’ paycheques. They’re due on the 15th of the month after you pay your employees. For example, June payroll remittances must be paid by July 15.
If your company has no employees, owners have some flexibility. If you take wages instead of dividends, you’ll need to remit monthly. However, owners are usually exempt from EI and can even pay themselves an annual bonus instead, making just one payroll remittance 15 days after year-end.
Miss a deadline? CRA will slap you with a 10% penalty (5% for a first offence). In Alberta, payments must be in by 10 p.m. (midnight Eastern time). CRA doesn’t mess around — don’t be late!
What happens if you don’t make instalments?
Since instalments are based on last year’s tax bill, if 2025 looks similar to 2024, your tax owing should be about the same. Here’s what happens if you skip instalments:
- You owe the same as last year: You’ll be charged interest from the due date of the instalment until you pay it.
- You owe less than last year: Interest is only charged on unpaid amounts. If you owed $8,000 last year and were supposed to pay $2,000 quarterly but end up owing only $6,000, you’ll be charged interest on the first three missed payments but not the fourth. If you owe less than $3,000 overall and didn’t make instalments, no interest is charged.
- You owe more than last year: If you owed less than $3,000 last year, you weren’t required to make instalments — even if you end up owing $30,000 this year, you won’t be charged instalment interest. However, if you knew you’d owe more than your instalments and didn’t pay extra, you’ll still need to cover the shortfall by the tax deadline. It pays to plan ahead.
When does interest start?
Each missed instalment starts accruing interest the day after it is due. If your year-end is June 30, 2025, and your instalments were due October 31, 2024, January 31, 2025, April 30, 2025, and July 31, 2025, but you don’t pay until September 20, 2025, the interest breakdown looks like this:
- Instalment 1: Interest accrues from November 1, 2024, to September 20, 2025.
- Instalment 2: Interest accrues from February 1 to September 20, 2025.
- Instalment 3: Interest accrues from May 1 to September 20, 2025.
- Instalment 4: Interest accrues from August 1 to September 20, 2025.
Interest rate: 6%, compounded daily.
What are instalment penalties?
If your instalments are over $1,000, then they can hit you with an additional penalty called instalment penalty — don’t ask me why.
Payment processing times
Here’s how long it takes for different payment methods to be processed:
- Cheque by mail: Processed when received by CRA
- CRA MyPayments: Up to 3 business days
- Online banking: 1 business day
- In-person at the bank: 1 business day
Need help with your tax plan?
Taxes don’t have to be a headache. Our Chartered Professional Accountant (CPA) team stays on top of ever-changing tax laws and regulations so you don’t have to. Whether it’s deductions, write-offs, GST filing, or corporate tax strategies, we’ve got you covered. Contact us!
Read more about Corporate Tax topics relevant to you and your small business.
There’s a lot to keep track of when it comes to tax instalments. As your small business accountants, we can make sure you never miss a payment, under-pay or owe interest. Make an appointment with us.
