Accounting Services, Vancouver
September 11, 2020

Instalment Payments

Instalment Payments

We've received a lot of phone calls & emails from clients regarding upcioming instalment payments. Below we have included some of the information from Canada Revenue Agency regarding instalment payments, calculator, reminders, etc. 

Instalment Reminder Received in August 2020

If you receive an instalment reminder in August 2020, you can choose to reduce or not pay further instalments for 2020 if you meet one of the following conditions:

  • The instalments you already paid this year will cover your estimated 2020 net tax owing

If you only received an instalment reminder in August and the reminder does not mention a March or June 2020 instalment payment, follow the instructions that apply to you:

No-calculation option – Pay the amount shown in box 2 of your reminder for September 15 and December 15.

Prior-year option – Calculate your 2019 net tax owing and add any CPP contributions payable, and any voluntary EI premiums payable. Pay 75% of the total on September 15 and 25% on December 15.

Current-year option – Estimate your current-year 2020 net tax owing and add any CPP contributions payable, and any voluntary EI premiums payable. Pay 75% of the total on September 15 and 25% on December 15.

 

Reminder, below we’ve included the descriptions for the 3 payment options. Choose the one that best fits for you. If you need help understanding these calculation options, or instalment payments, make sure to call us. 

 

From CRA: 

Calculation options

You have three options to choose from to calculate your instalment payments:

No Calulation Option

This option is best for you if your income, deductions, and credits stay about the same from year to year.

We will give the no-calculation option amount on the instalment reminders that we will send you. We determine the amount of your instalment payments based on the information in your latest assessed tax return.

Prior-Year Option

This option is best for you if your 2020 income, deductions, and credits will be similar to your 2019 amount but significantly different from those in 2018.

You determine the amount of your instalment payments based on the information from your tax return for the 2019 tax year. Use the Calculation chart for instalment payments for 2020 (open with Adobe Acrobat Reader) to help you calculate your total instalment amount due.

If you use the prior-year option and make the payments in full by their 2020 due dates, we will not charge instalment interest or a penalty unless the total instalment amount due you have calculated is too low. 

Current-Year Option

This option is best for you if your 2020 income, deductions, and credits will be significantly different from those in 2019 and 2018.

You determine the amount of your instalment payments based on your estimated current-year (2020) net tax owing, any CPP contributions payable, and any voluntary EI premiums. Use the Calculation chart for instalment payments for 2020 (open with Adobe Acrobat Reader) to help you calculate your total instalment amount due.

If you use the current-year option and make the payments in full by their 2020 due dates, we will not charge instalment interest or a penalty unless the amounts you estimated when calculating your total instalment amount due were too low. For more information, see Instalment interest and penalty charges.

Links for more information regarding instalments:

Paying by instalments

Instalment interest & penalties

 

 

Crystal Cahill

Crystal Cahill is responsible for the social media and marketing at Cahill CPA. Crystal completed her Bachelor of Arts Degree at Simon Fraser University in English, and has an Education Degree and teaching certification. She enjoys keeping clients updated on new accounting practices, upcoming tax deadlines, and news & events within the Cahill CPA office & staff. She is married to Cahill CPA partner Jordan Cahill, and together they have two young children.

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