20 Jul Do I have to make tax instalment payments for 2021?
Those who did not make sufficient instalment payments for 2020 are probably still recovering from a lump sum payment due when filing their tax return earlier this year. So, how do you know if you have to make tax instalments for 2021?
Under the Income Tax Act, quarterly tax instalments are required for this tax year if your “net tax owing” for 2021 will be more than $3,000 ($1,800 for Quebec) and was also greater than $3,000 ($1,800 for Quebec) in either 2020 or 2019 i.e., twice in any three consecutive years
When are tax instalment payments due?
Individual and self-employed individual income tax instalments are due on March 15, June 15, September 15, and December 15.
How much do I have to pay each instalment?
There are three options that may be used to determine how much you need to pay each quarter: the no-calculation option, prior-year option and current-year option. Individuals can choose the option that results in the lowest payments.
What happens if I don’t pay?
If you owe tax at the end of the year, you will pay interest on the unpaid tax instalment(s) dating back to the due date of the missed payment(s). Canada Revenue Agency’s annual interest rate is generally five percent (5%) per annum.
If you require assistance in determining your tax obligations, contact us to discuss your situation. We can also help you file overdue tax returns or plan ahead for the 2021 tax year.