Who has to pay CRA tax instalments in Canada?

You may have to pay CRA tax instalments if your net tax owing is more than $3,000 for 2026 and in either 2025 or 2024.

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated: 2026-09-16

The instalment threshold

The CRA uses a specific test to decide whether you have to pay instalments. You may have to pay if your net tax owing is more than $3,000 for 2026 and in either 2025 or 2024. If you live in Quebec, the threshold is $1,800. Both years matter, because the CRA looks at the current year and at least one of the two prior years.

This two-year test is important. A single year above the threshold does not always trigger instalments if the other year was below it. The rule is designed to catch people whose tax situation has become consistently different from a simple withholding arrangement.

Farmers and fishers are the exception. They have a single instalment due date of December 31 rather than four quarterly dates.

What net tax owing means

Net tax owing is the amount of tax you still owe after the tax already withheld and most non-refundable credits are applied. It is not your total income, your taxable income or your gross tax. Because it sits at the end of the calculation, it reflects both how much you earned and how much tax was already collected on your behalf.

This distinction explains why two people with the same salary can have different instalment obligations. One may have tax withheld at source on all income, while the other earns part of their income without withholding. The second person is more likely to have a net tax owing figure above the threshold.

Who typically has to pay instalments

Instalments are most common among people whose income does not have enough tax withheld at source. That group includes:

• Self-employed people and sole proprietors.
• People with rental income from property.
• Investors with significant interest, dividend or capital gains income.
• People with pension income that has little or no withholding.
• Gig and contract workers who receive payment without deductions.
• People who sold an asset and realized a large gain.

Employees with a single employer usually have enough tax withheld and rarely need to pay instalments. The more income sources you have, and the less withholding applies to each, the more likely it is that the CRA will expect instalments.

Why the two-year test matters

Because the test looks at two years, your instalment status can change gradually. Suppose your net tax owing was under the threshold for several years, then jumped above it in one year. If the prior year was below the threshold, you may not have to pay instalments yet. If it stays above the threshold the following year, the two-year test is met and instalments begin.

This is why it pays to track your net tax owing rather than just your income. A rise in income does not always mean instalments, and a fall does not always remove them. The mix of income sources and the amount of withholding matter just as much as the total.

Quebec residents

Quebec administers its own provincial income tax, and the federal threshold for instalments is different there. For Quebec residents, the threshold is $1,800 rather than $3,000. If you live in Quebec, use the lower figure when you check whether instalments apply to you, and confirm the details with Revenu Quebec and the CRA.

How the CRA tells you

The CRA sends two instalment reminders each year on form INNS1. The February reminder covers the March and June payments, and the August reminder covers the September and December payments. These reminders are not bills, but they are the clearest signal that the CRA expects instalments from you.

If you do not receive a reminder, that does not automatically mean you owe nothing. You are responsible for knowing your obligation. Check your CRA account and your own numbers if your income has changed, and keep an eye on your net tax owing from year to year.

What to do if your income changes

Instalments are based on estimates, so changes in income matter. If you expect to earn less, the prior-year option can lower your payments. If you expect to earn more, the current-year option lets you pay based on your own forecast. Either way, the goal is to pay enough to avoid interest without tying up more cash than you need to.

If your income drops sharply and you have already paid instalments, you may end up with a refund when you file. If it rises and you paid too little, you may face interest. Reviewing your estimate partway through the year can help you avoid both surprises.

Instalments and your cash flow

Because instalments are prepayments, they affect your monthly budget as well as your tax bill. Setting aside money as income arrives makes each due date easier to meet. If you wait until the reminder arrives, you may need to find a large sum on short notice.

A separate savings account for tax instalments can keep the money from being spent on day-to-day costs. If cash flow is tight, remember that instalments spread the cost of tax you would otherwise owe in a lump sum when you file.

If you think the reminder is wrong

An instalment reminder is an estimate, not a final assessment. If the amount looks too high, check it against your own records and your expected income for the year. You can choose a different calculation option that better matches your situation, and you can contact the CRA to correct information it holds.

Acting early matters. If you wait until December to question a reminder, you have less room to adjust your payments before the final due date. Review the February reminder as soon as it arrives so you have time to plan.

If you are not sure

This guide is general information only, not tax advice. Instalment rules can change, and your situation may involve credits, deductions or income types that affect the answer. Before you decide whether you have to pay, confirm your obligation with the CRA or a qualified tax professional.