Tax Instalments for Self-Employed
Who has to pay quarterly instalments, the three ways to calculate them, due dates, interest and the penalty.
The short version
- You must pay quarterly tax instalments if your net tax owing is more than $3,000 this year and was also more than $3,000 in either of the two previous years. CPP on self-employment counts toward the total.
- Due dates for individuals: March 15, June 15, September 15 and December 15. Farmers and fishers pay once, on December 31.
- There are three ways to calculate them. Pay what CRA's reminder says (the no-calculation option) and you won't be charged instalment interest, even if your tax turns out higher.
- Late or short instalments cost interest at the prescribed rate (7% in the fourth quarter of 2026), compounded daily. If that interest tops $1,000, a penalty can be added.
- Paying early or overpaying a later instalment earns credit interest that offsets the charge for being short earlier in the year.
Tax Instalments for Self-Employed
An employee pays tax every payday without noticing. A self-employed person pays it in April, all at once, and notices a great deal. After a year or two of that, CRA stops waiting for April and asks for the money four times a year. That letter is a sign of success, even if it doesn't feel like one when it arrives. Here's how instalments work and how to pay the right amount without overthinking it.
Do You Have to Pay Instalments?
For 2026, you must pay instalments if your net tax owing is more than $3,000 for 2026, and was more than $3,000 in either 2025 or 2024. Net tax owing is roughly your total federal and provincial tax, plus CPP payable on self-employment, minus tax already withheld at source.
| Your situation | Instalments for 2026? |
|---|---|
| Owed $2,400 in 2024, $4,800 in 2025, expect $5,500 in 2026 | Yes (2025 and 2026 both over $3,000) |
| Owed $6,000 in 2025, expect $2,000 in 2026 | No, if 2026 really ends at or below $3,000 |
| First year in business, expect to owe $7,000 | No requirement yet (but save the money anyway) |
| Employee with a side business that adds $4,000 owing each year | Yes, once two of the three years are over $3,000 |
The threshold is $1,800 in Quebec, which we don't otherwise cover. Your first instalment reminder usually arrives after a second year of owing more than $3,000.
How Much a Self-Employed Person Owes
A sole proprietor in Ontario with $60,000 of 2026 profit and no other income owes about $7,880 of income tax and $6,720 of CPP: about $14,600 in total, or $3,650 a quarter. CPP alone is nearly half the bill, which is why people who budget only for "income tax" come up short. Estimate yours on the self-employed tax calculator, and see how much to save for taxes.
How much should my instalments be?
Enter last year's balance owing and your expected income this year. The assistant compares the three options, tells you which one costs least without risking interest, and gives you four dates and four amounts.
The Three Ways to Calculate
| Option | How it works | Best when |
|---|---|---|
| No-calculation | Pay the amounts on CRA's reminders. March and June are each a quarter of the tax from two years ago; September and December make up the rest of last year's total. | You want zero risk of instalment interest, or your income is steady |
| Prior-year | Pay a quarter of last year's net tax owing on each date | Last year was much lower than the year before |
| Current-year | Estimate this year's net tax owing and pay a quarter on each date | Income is dropping noticeably this year |
If you follow the reminders exactly and on time, you won't be charged instalment interest, even if you end up owing more in April. With the current-year option, you carry the risk: estimate too low, and interest runs on the shortfall. You still owe the balance on April 30 either way.
Due Dates and How to Pay
- March 15, June 15, September 15, December 15. If a date falls on a weekend or holiday, the payment is on time if received the next business day.
- Pay through online banking (choose the instalment payee for the tax year, not the balance-owing payee), CRA's My Payment, a pre-authorized debit set up in My Account, or a third-party processor.
- Label the payment for the right tax year. A December payment landing on the wrong year is a common, annoying mix-up.
The tax filing and payment calendar is on Canadian tax deadlines.
Put your dates in your calendar
Tick what applies to you and get every instalment, GST/HST and filing date for the next 12 months, with reminders, in one calendar file.
Instalment Interest and the Penalty
CRA charges interest, compounded daily at the prescribed rate, on any instalment that's late or short, using whichever calculation option gives you the least interest. A penalty applies only if your instalment interest for the year is more than $1,000: CRA takes the interest, subtracts the greater of $1,000 or 25% of the interest you'd have owed with no instalments at all, and charges half of what's left.
| Example | Amount |
|---|---|
| Instalment interest for the year | $2,500 |
| Interest with no instalments at all: $3,200, so 25% is $800; the greater of $1,000 and $800 | $1,000 |
| Penalty: ($2,500 – $1,000) / 2 | $750 |
Missed one? You can wipe out some or all of the interest by paying the next instalment early or paying extra: CRA credits interest on early and overpaid instalments against the charge for the same year. Interest charged is never deductible. See late payment interest.
When You Can't Pay
Pay what you can by each date; every dollar stops interest on that dollar. If the April balance will be more than you have, file on time anyway, so you avoid the late-filing penalty on top, and call CRA's TeleArrangement line at 1-866-256-1147 to set up a payment arrangement. See why do I owe taxes? for the usual reasons a balance appears.
Rules of Thumb
- Open a separate tax account and move a fixed share of every payment into it.
- Pay the reminder amounts. Adjust only if income drops a lot.
- Set calendar alerts for the 15th of March, June, September and December.
- If income jumps, pay more than the reminder; the reminder protects you from interest, not from the April bill.
- Check your instalment history in My Account before you file, and compare it with what your tax software expects.
Instalments also apply to rental income, investment income and pensions with too little withheld. Self-employed basics are on self-employed taxes in Canada, and Return Check confirms the instalments CRA has on file match what you paid before your return goes in.
Tax Instalment Questions
Who has to pay tax instalments in Canada?
Individuals whose net tax owing is more than $3,000 in the current year and in either of the two previous years ($1,800 in Quebec). This is common for self-employed people, landlords and retirees with little tax withheld.
When are tax instalments due?
March 15, June 15, September 15 and December 15. Farmers and fishers make one instalment on December 31.
What happens if I don’t pay my tax instalments?
CRA charges instalment interest at the prescribed rate, compounded daily. If the interest is more than $1,000 for the year, an instalment penalty can also apply.
How do I avoid instalment interest?
Pay the amounts on CRA’s instalment reminders in full and on time (the no-calculation option). Paying early or overpaying a later instalment also offsets interest on earlier shortfalls.
Does CPP count toward instalments for self-employed people?
Yes. CPP contributions on self-employment earnings are part of the net tax owing used for the $3,000 test and the instalment amounts.
Sources: CRA, Required tax instalments for individuals; Options to calculate; Interest and penalty charges. Checked October 2026. The tax example comes from our 2026 Ontario rules engine. The prescribed rate changes every quarter.
Last reviewed October 11, 2026 against CRA and Government of Canada sources. How we check our facts.