Corporations are generally required to pay their taxes in instalments to the Canada Revenue Agency (CRA).
This could mean monthly or quarterly payments that are due by a set date. When payment deadlines are not met, the agency applies a penalty (prescribed interest rate) on tax amounts owing.
What are the CRA corporate tax instalment due dates in Canada, and what is the corporation income tax return filing date?
I will answer these questions and more below.
Related: GST/HST Instalment Payment Dates.
CRA Corporate Tax Instalment Due Dates 2023
A tax instalment refers to periodic payments of income tax throughout the year.
Similar to how tax is deducted from your bi-weekly or monthly paycheque, businesses (both small and large) are required to either pay a portion of their annual tax obligations on a monthly or quarterly basis.
Quarterly Tax Instalments
If your business qualifies as a small Canadian Controlled Private Corporation (CCPC) and meets CRA’s eligibility criteria, you can make quarterly instalment payments.
The due dates are dependent on your business’s fiscal year.
For example, if your corporation’s fiscal year-end is on December 31, your quarterly taxes in 2023 are due by:
- March 31, 2022
- June 30, 2022
- September 30, 2022
- December 31, 2022
As per the CRA, your small CCPC may be eligible for quarterly tax instalments if:
- It has a perfect compliance history.
- It has claimed a small business deduction for the current or previous tax year.
- All associated corporations in the current or previous tax year have taxable income of $500,000 or less, and taxable capital of $10 million or less.
Monthly Tax Instalments
If the corporation is not eligible for quarterly instalments because it no longer meets the requirements, it must pay taxes by the last day of each month.
If the corporation became ineligible for quarterly instalments during a tax year, you can continue with making an instalment for the current quarter (when due), and then start monthly payments after that.
Exceptions
A new corporation in the first year of operation is not required to pay taxes on an instalments basis.
You may also not need to pay instalments if the total tax payable is $3,000 or less.
In either scenario, you should pay your tax bill by the due date following the end of the tax year.
How To Calculate Corporation Tax Instalment Payments
For quarterly instalments, you can divide the tax paid in the previous tax year by 4; each one-quarter of the tax is due by the last day of each quarter.
For example, if your tax payable in 2022 was $50,000, your quarterly instalments in 2023 are $12,500 (i.e. $50,000/4).
You can also use the taxes estimated for the current year in your calculation; however, if there is a shortfall at the end of the year, CRA will charge interest on the balance.
For monthly tax instalments, you can divide last year’s taxes by 12 and make one-twelfth of the payment at the end of each month.
Using the $50,000 example, you will pay $4,167 monthly.
How To Pay Business Instalment Taxes
Similar to GST/HST instalment taxes, you can pay corporate income tax instalments using any of the following methods:
- Through your financial institution via online banking or in-person at a branch.
- CRA My Payment service using Visa Debit, Debit Mastercard, or Interac.
- My Business Account: Set up preauthorized debits that are paid directly from your bank account.
- Use third-party service providers like PaySimply and Plastiq (these providers may accept credit cards, PayPal, and/or Interac e-Transfer).
- Pay using cash or a debit card at a Canada Post outlet. You will need a QR code.
- Cheque: Send a cheque to the CRA along with your personalized remittance voucher
Interest and Penalties for Late Instalments
CRA levies interest on late or insufficient payments at the prescribed rate (currently at 5%). This interest charge is compounded daily on outstanding amounts.
In addition to instalment interest, you could also be on the hook to pay an instalment penalty.
If outstanding taxes are not paid by the “balance-due day,” i.e. 2 months after the end of the tax year, the corporation may also owe “arrears interest”.
The balance-due day for some CCPCs is 3 months after the year-end.
Frequently Asked Questions
The return filing date for a corporation is 6 months after the fiscal year-end. This is different from the business’ due date for outstanding tax balances, which is 2 or 3 months after the end of the tax year.
You can pay the CRA directly from your online banking, use the My Payments service, or set up preauthorized debits through your My Business Account.
You may have to pay tax instalments on your business income if your net tax for the previous year exceeded $3,000 (or $1,800 in Quebec). Tax instalments for individuals are due on March 15, June 15, September 15, and December 15.
Related:
- Ontario Tax Brackets
- British Columbia Tax Brackets
- Federal Income Tax Brackets
- Free Tax Return Software in Canada
- Home Business Tax Deductions in Canada
- How To Register a Business in Ontario
Have questions? Leave them in the comments.
