This guide reflects the rules for the tax year ending December 31, 2025.
It applies to individuals filing their 2025 tax return in 2026.
Self-employed Canadians often need to pay quarterly tax instalments because no employer withholds taxes on their behalf. Instalments help you pay your taxes throughout the year instead of owing a large amount at tax time.
This guide explains when instalments are required, how they are calculated, and how to avoid penalties.
🧭 1. What Are Tax Instalments? #
Tax instalments are quarterly payments made to the CRA to cover:
- Income tax
- CPP contributions
- GST/HST (if you are an annual filer)
They are required when your tax owing is consistently above a certain threshold.
📈 2. When Do You Need to Pay Instalments? #
You must pay instalments if:
✔ You owe more than $3,000 in tax #
- For 2025 and
- For either 2024 or 2023
If you live in Quebec, the threshold is $1,800 (because Revenu Québec collects provincial tax separately).
This applies to:
- Freelancers
- Contractors
- Gig workers
- Small business owners
- Anyone with insufficient tax withheld
📅 3. Instalment Due Dates for 2026 #
For the 2026 calendar year, instalments are due:
- March 15, 2026
- June 15, 2026
- September 15, 2026
- December 15, 2026
If the date falls on a weekend or holiday, CRA considers it on time if received the next business day.
🧮 4. How Instalments Are Calculated #
CRA offers three methods:
✔ 1. No‑calculation method (CRA recommended) #
CRA sends you instalment reminders showing:
- How much to pay
- When to pay
If you follow CRA’s amounts, you won’t be charged interest, even if they are wrong.
✔ 2. Prior‑year method #
You base your instalments on your 2024 tax return.
This is useful if your income is stable.
✔ 3. Current‑year method #
You estimate your 2025 income and pay instalments based on that estimate.
This is useful if:
- Your income is lower this year
- You want to avoid overpaying
But if you underestimate, CRA charges interest.
🧮 5. Example: Instalment Calculation #
You owed $4,800 in tax for 2024.
Using the prior‑year method:
\[ 4,800 \div 4 = 1,200 \]You must pay $1,200 each quarter in 2026.
💸 6. What Happens If You Don’t Pay Instalments? #
CRA charges:
✔ Instalment interest #
Calculated daily.
✔ Instalment penalty #
If your instalment interest exceeds $1,000.
Penalties can add up quickly, especially for high‑income freelancers.
🧾 7. How to Pay Instalments #
You can pay via:
- CRA My Account
- Online banking (payee: CRA – tax instalment)
- Pre‑authorized debit
- Credit card (via third‑party providers)
- Cheque or money order
🔄 8. Instalments and GST/HST #
If you are an annual GST/HST filer, your instalments may also include:
- GST/HST collected
- Minus Input Tax Credits (ITCs)
Quarterly GST/HST filers do not pay instalments — they remit quarterly instead.
🧮 9. Instalments and CPP #
CPP contributions for self-employed individuals are included in instalments.
CPP is calculated on:
\[ \text{Net business income} - 3,500 \]up to the annual maximum.
❓ 10. Frequently Asked Questions #
Do I need to pay instalments if my income drops? #
You can switch to the current‑year method and pay less.
What if I miss a payment? #
CRA charges interest but no late‑filing penalty.
Do instalments apply to employees? #
Only if they have significant non‑employment income.
Can I pay instalments early? #
Yes — CRA applies payments to the earliest instalment.
Do instalments reduce my tax bill? #
No — they simply prepay your taxes.
🔗 11. Related Guides #
- Self-Employed Taxes in Canada
- Self-Employment Tax Deductions
- Self-Employment Expenses
- CPP for Self-Employed Canadians
- GST/HST for Self-Employed Canadians
