I hope you can help me with the following situation:
2021 was the first year of my business (sole prop). My net tax owing is more than $3000, means I am expecting to pay instalments from now on. I am currently not able to submit my 2021 tax return as I am still waiting for some T5s.
In the meanwhile, the due dates for tax instalments are coming closer (March 15 2022).
Since I already know that I have to pay tax instalments, can I just use the current-year option to calculate my tax owing and proactively pay the instalment? (I would go for the current-year option because I expect significant changes in my income).
I think the question is, is there a dependency between my T1 submission and the upcoming March 15 due date? As of today, CRA does not even know that I have to pay a tax instalment as the 2021’s T1 is the first year of my business.
Thank you for your thoughts on this,
Without getting into a lot of detail, if they don’t ask there is no installment payments needed.
What @Arliss said. CRA will notify you when you have to pay installments. Your tax preparer will also provide you with a schedule.
Your instalment obligation for 2022 is based on your 2021 filing and begins Aug 15. In 2023 your Feb and May instalments are based on 2021, Aug and Oct updated to reflect 2022.
If you were requested to make installments years ago, but had less than $1,600 to pay at filing since then, there is no problem. However if you have to pay more than $1,600 this year and did not make installments you will be charged interest because you were told to make installment years ago.
It is funny to see that some people say installment and other say instalment. I was also not sure about the right spelling. CRA uses instalments…So maybe that is the right one then
Thanks a lot for your help on this, your help is much appreciated!
I have another question about GST instalments. I mentioned earlier that 2021 was my first year of operation. I already filed my 2021 GST return in January. I had GST owing >=$1500 and I was expecting that my filing frequency will change from annual to quarterly.
In MyCRA business account I can see that my balance is zero and my GST owing has been paid in full. However, my filing frequency is still annual. The CRA website says if you owe more than $1500 in a year you have to file quarterly.
Should I also follow what MyCRA business account is saying or should I proactively pay quarterly? Maybe it takes awhile until CRA will inform me update the GST filing frequency?
Thank you guys- I know those questions are pretty basic for you. And for me they are pretty advanced lol
Installment is the common American spelling.
Instalment is used by the rest of the English speaking world with the exception of Canada, where Instalment is used about 60% of the time and Installment is used about 40% of the time.
Goes to show how Americanized we are - how about the spelling of cheque/check, etc. American spell checkers influence these outcomes.
Fulfilment vs Fulfillment
Enrolment vs Enrollment
Are you sure the CRA site doesn’t say “pay” quarterly rather than “file” (i.e. installments)?
Pass gas instead of fart.
They would not change you from annual GST filing automatically till you reach $1,500,000 in sales.
I got your hint, I messed up the wording. You are right, CRA says instalments, not filing, thanks for clarifying…
Ok, understood. I (again) messed up the terms…In my head filling and instalments are the same…
For your GST Instalment Obligation, the CRA will not tell you about this.
But in My Business Account, they provide an Instalment Calculator. I would use that to determine your obligation.