The way you pay taxes throughout the year depends heavily on whether you're classified as a contractor or employee. Contractors in Canada typically pay taxes in quarterly installments to the CRA, while employees have taxes deducted automatically from each paycheque by their employer. If your income is high enough or fluctuates significantly, the CRA may require you to make regular installment payments. Understanding your payment obligations for 2026 is essential to avoid penalties and interest charges. Contractors operating as self-employed individuals don't have an employer withholding taxes on their behalf. Instead, you're responsible for setting aside money throughout the year and remitting it to the CRA on specific dates. The CRA requires quarterly installments if your net tax owing is over a certain threshold (typically $3,000 for the current or either of the two preceding years). Installment due dates for 2026 are: March 31, 2026 June 30, 2026 September 30, 2026 December 31, 2026 Each installment is usually one-quarter of your estimated annual tax bill. The CRA calculates your required amount based on your previous year's income and tax owing. Employees have a fundamentally different tax payment rhythm.
This CRA rule may apply to you if your net tax owing was over $3,000 in the current year or either of the two preceding years. If so, quarterly installments are required. You can contact the CRA to find out if you're required to pay installments based on your specific income history.
The CRA charges interest on the missed amount starting the day after the deadline. The interest rate compounds daily and changes quarterly. The longer the debt remains unpaid, the more interest accumulates, so it's important to remit missed payments as soon as possible.
Yes, you can request a reduction in installments if you expect your 2026 tax owing to be significantly lower than your previous year. You must notify the CRA in writing before your first installment is due and provide documentation of your lower expected income.
No, employees generally don't make quarterly payments. Their employer deducts tax from each paycheque throughout the year. However, if you have additional income (investment or self-employment), you may need to make installments on that income separately.
The CRA charges daily compound interest on any installment shortfall, plus potential penalties if the underpayment was substantial. The interest rate changes quarterly, so the total owing depends on how long the debt remains unpaid and how far below your required amount you paid.