# Tax instalments for the self-employed in Canada Who has to pay income tax instalments in Canada (the $3,000 rule), the four due dates, the three ways to work out the amount, and what happens if you pay late. With a worked example. Published: 2026-10-04 · Spark --- {/* Sources, checked October 2026: Who has to pay ($3,000, $1,800 Quebec; this year and one of the two before): https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html Due dates (Mar/Jun/Sep/Dec 15; farmers and fishers Dec 31; weekend rule): https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/due-dates.html Three options: https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/options-calculate.html 2026 calculation chart (net tax owing excludes CPP/EI; total incl. CPP divided by 4): https://www.canada.ca/content/dam/cra-arc/migration/cra-arc/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/Instalment-chart-fill-26e.pdf Interest and penalty ($1,000 penalty test; paying early offsets): https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/interest-penalty-charges.html */} You have to pay income tax by instalments in 2026 if your **net tax owing is more than $3,000** for 2026 **and** was also more than $3,000 in either 2025 or 2024. In Quebec, the threshold is $1,800. Instalments are due **March 15, June 15, September 15 and December 15**. If you're self-employed and making a profit, you'll almost certainly cross that line, because nobody is taking tax off your income as you earn it. Those are the CRA's rules on [who has to pay instalments](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html). The rest of this guide covers what "net tax owing" means, the three ways to work out the payments, and what it costs to skip them. ## What "net tax owing" means Net tax owing is roughly the income tax on your return minus the tax that was already taken off at source, such as through payroll at a job. It's federal and provincial income tax only. The CRA's [2026 calculation chart](https://www.canada.ca/content/dam/cra-arc/migration/cra-arc/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/Instalment-chart-fill-26e.pdf) is clear on one point people miss. Your CPP contributions on self-employment income **don't count** toward the $3,000 test, but once you have to pay instalments, CPP **is added** to the amount you pay. For a self-employed person with a decent year, CPP can be $8,000 or more of the total. [CPP for the self-employed](/guides/cpp-contributions-self-employed) has the 2026 figures. ## The due dates From the CRA's [payment due dates](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/due-dates.html): - **March 15** - **June 15** - **September 15** - **December 15** If a date falls on a weekend or a public holiday, a payment received on the next business day is on time. In 2026, March 15 was a Sunday, so the first payment was due March 16. **Farmers and fishers** whose main income is from farming or fishing make one payment, on **December 31**. Instalments are payments toward **this** year's tax. The September 15, 2026 payment is toward your 2026 tax, which you'll file in 2027. Your 2026 return then shows what you paid by instalments as a credit against what you owe. ## The three ways to work out the amount The CRA gives you [three options](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/options-calculate.html). You choose whichever suits you, and you can switch. ### 1. The no-calculation option The CRA sends you instalment reminders with the amounts already worked out from your latest assessed return. Pay what the reminder says, on time. This is the simplest option, because there's nothing to work out. Its weakness is that it's based on old information. If this year is much better than the past two, you'll have a balance to pay in April. If it's much worse, you'll have paid more than you needed to, and it comes back as a refund when you file. ### 2. The prior-year option You base the payments on last year's return. On the CRA's chart, you add up your 2025 net tax owing and your 2025 CPP on self-employment income, then divide by four. That gives four equal payments. This suits a year that looks like last year but different from the year before. ### 3. The current-year option You estimate this year's income, deductions and credits, work out the tax and CPP, and divide by four. This makes sense if your income has dropped a lot, such as after losing a major client. For the prior-year and current-year options, the CRA says that if you make the payments in full by the due dates, it won't charge instalment interest or a penalty, "unless your estimated instalment amounts are too low." With the current-year option, an estimate that's too low is the real risk. If you use it, you need decent books to make the estimate from. Your profit for the first six or nine months, from a [profit and loss statement](/guides/how-to-read-a-profit-and-loss-statement), is the best starting point. ## A worked example A self-employed electrician in Alberta looks at his 2025 return to plan his 2026 instalments: - Net federal tax: **$9,800** - Provincial tax: **$4,600** - Tax deducted at source: **$0** (he had no job) - **Net tax owing for 2025: $14,400**, well over $3,000. His 2024 return was over $3,000 as well. - CPP on self-employment income for 2025 (line 42100): **$8,068.20**, the 2025 maximum Under the **prior-year option**: Total instalment amount = $14,400 + $8,068.20 = **$22,468.20** Each payment = $22,468.20 ÷ 4 = **$5,617.05**, on March 16, June 15, September 15 and December 15, 2026. When he files his 2026 return, the $22,468.20 he paid goes against his 2026 tax and CPP. If 2026 was a better year, he pays the difference by April 30, 2027. If it was a worse year, he gets a refund. ## The year with no instalments, and the year after Because the rule looks at this year **and** one of the two years before, you usually aren't required to pay instalments in your first profitable year of self-employment. That sounds like good news. It means the whole year's tax and CPP land at once, due by **April 30** of the next year. Then, in your second year, instalments usually start, so in the same spring you pay last year's full bill and your first instalment for this year a few weeks earlier, on March 15. That double hit is where a lot of first-time self-employed people find themselves short. You don't have to wait to be told. You can pay instalments voluntarily in your first year, or put the money aside in a separate savings account. Either way, the tax doesn't land all at once. ## What happens if you don't pay From the CRA's page on [instalment interest and penalties](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/interest-penalty-charges.html): - **Interest.** The CRA charges instalment interest on every late or short payment, compounded daily at its prescribed rate, from the date the instalment was due. - **A penalty**, on top of the interest, only if your instalment interest for the year is **more than $1,000**. The penalty is worked out from how far your interest goes above $1,000 or 25% of the interest you'd have paid with no instalments at all, whichever is more. - **Paying early can cancel it out.** If you missed one payment, paying the next one early, or paying more than required, earns credit interest that reduces what you're charged for the earlier shortfall in the same year. Instalment interest applies only if the CRA's rules say you had to pay instalments. And separately from instalments, any balance still owing after April 30 starts collecting interest too. ## How to pay You can pay through your bank's online bill payment, through your CRA account, or by the other methods on the CRA's [payments page](https://www.canada.ca/en/revenue-agency/services/payments-cra.html). When you pay, make sure the payment is marked as an instalment for the right tax year, not as a payment on an old balance, and check in your CRA account afterwards that it landed where you meant. ## Keeping it simple What makes instalments manageable is knowing, at any point in the year, roughly what you've earned. If your books are a month behind, the March payment is based on last year's numbers and the year-end bill is a surprise. If they're current, you can see by June whether you're ahead of last year and set aside more. A rule that works for many owners: move a fixed share of every customer payment into a separate savings account the day it arrives, and pay instalments and the April balance from there. Your accountant can tell you the share that fits your income and province. ## Where Spark Books helps [Spark Books](/books) keeps your profit current from your uploaded bank and card statements, so the current-year option isn't guesswork. It shows a 13-week cash forecast that includes tax payments, so a September instalment doesn't arrive as a surprise. Spark doesn't calculate your income tax or instalments, and it doesn't pay or file anything with the CRA. It's free, with no card.