Corporate Tax Instalment Calculator
A profitable year means paying next year’s tax in advance. Work out whether instalments are required at all, whether you qualify for quarterly rather than monthly, which of the three calculation methods costs least, and what underpaying costs.
per instalment, best method
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The Three Methods
| Method | How It Works | Total for the Year | Per Instalment |
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Monthly or Quarterly
| Condition | What It Requires | Your Position |
|---|
Where You Stand Today
| Item | Basis | Amount |
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Points That Decide This
What to Do Next
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Disclaimer: A corporation is generally required to pay tax by instalments where its total taxes payable for the current or the preceding taxation year exceed the threshold in the Act. Instalments are generally payable monthly, on the last day of each month of the taxation year. An eligible Canadian-controlled private corporation may pay quarterly instead, where it claims the small business deduction in the current or preceding year and meets conditions including limits on taxable income and on taxable capital employed in Canada, in each case taking associated corporations into account, together with a requirement that the corporation has a satisfactory record of filing returns and remitting amounts when due in the preceding period. A corporation that loses eligibility, including by filing or remitting late, is required to revert to monthly instalments. Three methods of calculating instalments are available: based on the estimated tax for the current year, based on the tax for the preceding year, and a method using the second preceding year for the earliest instalments with the balance of the preceding year’s tax spread over the remainder. A corporation may choose whichever method it wishes, but where instalments based on an estimate of the current year prove insufficient, interest is charged. Instalment interest is computed at the prescribed rate, compounded daily, running from each instalment due date, and may be offset by instalments paid early or in excess. An instalment penalty applies where instalment interest exceeds a threshold amount, computed as a proportion of the excess over the greater of that threshold and a proportion of the interest that would have been payable had no instalments been made. The interest and penalty figures on this page are simplified indications produced from editable inputs, are not computed on the daily compounding basis the legislation requires, and should not be relied on as the amounts that will be assessed. All thresholds, ceilings and rates are editable inputs that should be confirmed against current published figures. This page is general information, not tax advice.
The First Profitable Year Creates the Obligation
A corporation pays its first year as a single balance. Then it has a prior year with tax in it, and from that point onward the expectation is that tax arrives through the year rather than after it.
That transition catches owners out more than any other part of corporate tax compliance, because nothing arrives to announce it. The obligation follows from the numbers rather than from a letter, and the first sign of a problem is often an interest charge on the next assessment.
The threshold is low. Where total taxes payable exceed a few thousand dollars in either the current or the preceding year, instalments are expected. A corporation earning well under the small business limit will usually cross it.
Monthly Unless You Qualify for Quarterly
The default is twelve payments a year. Quarterly is available to an eligible CCPC, and the conditions are specific: claiming the small business deduction, staying within income and capital ceilings measured across the associated group, and having filed and remitted on time.
That last condition is the one businesses lose without realising. A single late payroll remittance or a late return can cost quarterly eligibility, turning four payments a year into twelve.
| Condition | Requirement for Quarterly |
|---|---|
| Corporation type | CCPC claiming the small business deduction |
| Taxable income | Within the ceiling, across the group |
| Taxable capital | Within the ceiling, across the group |
| Compliance record | Nothing filed or remitted late |
Three Methods, and You Pick
There are three ways to calculate what to pay, and a corporation may use whichever it likes. They produce different amounts, which is the point.
The first spreads your estimate of this year’s tax. The second spreads last year’s tax. The third uses the year before last for the earliest instalments and then spreads the balance of last year’s tax over the rest.
The third method is the one people miss. Where tax has been rising, it keeps the early instalments low by reference to an older, smaller year. On a growing business that is a genuine cash flow advantage for the first part of the year, and it costs nothing to use.
Estimating This Year Is the Risky One
Paying on the current-year estimate produces the lowest instalments where profit is falling, and it is entirely permitted. The catch is that if the estimate turns out low, interest is charged as though the correct instalments had been due all along.
So the estimate method rewards accuracy and punishes optimism. Where the year is genuinely weaker it is the right choice; where it is merely hoped to be weaker, the prior-year method is safer.
Interest, Then a Penalty on Top
Underpaying produces interest at the prescribed rate, compounded daily from each missed due date. That is the ordinary consequence and it is manageable.
Beyond a threshold a further penalty applies, calculated on the excess interest. It is designed to catch corporations that ignore instalments entirely rather than those who are modestly short, but it arrives without warning and is worth avoiding by paying something rather than nothing.
Overpaying early offsets underpaying later. Instalment interest is calculated across the year with credit for amounts paid early, so a corporation that is behind can reduce or eliminate the charge by catching up rather than waiting for the balance due date. Doing it sooner is strictly better than doing it later.
What This Calculator Does Not Cover
- Daily compounding, which the real interest computation uses
- Provincial instalments filed separately where that applies
- Short taxation years, where the schedule differs
- Amalgamations and wind-ups, which affect the instalment base
- GST/HST instalments, which run on their own rules
- The exact penalty computation, which has two moving parts
Pick the method once and diarise the dates. Our tax planning service covers choosing the method that suits where profit is heading, confirming quarterly eligibility, and setting the schedule so the payments happen without anyone having to remember them.
Frequently Asked Questions
Common questions on corporate instalments.
Related Calculators and Guides
More on paying corporate tax.
Set the Schedule Before the Interest Starts
Send us last year’s return and your expectation for this year. We will confirm whether instalments are required, whether you qualify for quarterly, which method costs least given where profit is heading, and set a schedule so the payments happen without anyone having to remember them.