When you're an employee, your employer withholds tax from every paycheque and sends it to the government on your behalf. A self-employed worker has no one to do that: they receive their fees in full and have to handle the tax themselves. That's where tax instalments come in — tax payments spread across the year instead of one big bill in the spring. Here's who has to pay them, on what dates, and above all how much to set aside.
What is a tax instalment?
A tax instalment is a tax payment you make in advance, during the year, on income that hasn't been taxed yet. It simply means paying as you go, with the final tally done when you file your return.
The system exists because the taxman would rather not wait a year for its money. An employee pays tax on every paycheque without even thinking about it. A self-employed worker collects their fees in full: with nothing set aside, they would face a bill of several thousand dollars all at once. Instalments spread that bill across the year.
Do you have to pay? The $3,000 threshold
Not everyone is affected. The Canada Revenue Agency (CRA) rule is straightforward: you have to pay instalments if your net tax owing is more than $3,000 in the current year and in either of the two previous years (2025 or 2024).
"Net tax owing" is what's left to pay once the tax already withheld at source is subtracted. A self-employed worker, who has no tax withheld at source, reaches that threshold quickly.
One important point for Quebec: the threshold is lower there. Because Revenu Québec collects provincial tax on its own side, the CRA drops its threshold to $1,800 for a Quebec resident. In practice, many self-employed Quebecers pay instalments to both administrations — the CRA for federal tax, Revenu Québec for provincial tax.
Four dates in the year
Instalments aren't paid whenever you like: they fall on four fixed dates, one per quarter.
| Instalment | Date |
|---|---|
| First | March 15 |
| Second | June 15 |
| Third | September 15 |
| Fourth | December 15 |
Farmers and fishers are an exception: they have a single payment, on December 31. The CRA sends you a notice when it figures you should be paying instalments, but it's up to you to judge whether you actually cross the threshold for the year.
How much should you set aside?
That's the real question, and there are two ways to look at it.
The simplest: pay the amount the CRA and Revenu Québec tell you. With the "no-calculation" option (see below), the tax authorities work out your instalments from your tax in past years and send you the exact figure. All you do is pay it on the scheduled dates.
If you'd rather estimate it yourself: set aside, with every payment you receive, a share matching your average tax rate. The average rate is the real share of your income that goes to tax once everything is worked out — not to be confused with the marginal rate, which applies only to your last dollar earned.
A round-number illustration helps picture it. Say you expect to owe $6,000 in tax for the year. Split into four, that's $1,500 per instalment, or about $500 to set aside each month. Putting that money aside as soon as it comes in avoids the springtime surprise.
To get a sense of the rate that applies at your income level, the Salarium net-salary calculator gives a quick ballpark. Keep in mind it estimates an employee's situation: a self-employed worker also contributes to the QPP themselves on their business income, which adds a bit to the bill.
How the amount is calculated
If you'd rather not pay by guesswork, the CRA offers three calculation methods, and you're free to pick the most advantageous one.
- The no-calculation option: the CRA does the math for you and sends you the amount to pay. Best if your income, deductions and credits stay about the same from year to year.
- The prior-year option: your instalments are based on last year's tax. Handy when the current year is similar to the previous one but very different from the year before that.
- The current-year option: you estimate the current year's tax yourself. That's the right choice if your income is going to change a lot — a first big year on your own account, for instance.
The advantage of the no-calculation option: by paying exactly what the CRA asks, on the right dates, you're sure not to be in default, even if your final tax ends up higher than expected.
Avoiding interest and penalties
Neglecting your instalments is expensive. Paid late, or less than the amount due, and the CRA and Revenu Québec charge interest — and, in some cases, a penalty on top. That interest isn't deductible: it's money lost for nothing.
Three habits are enough to stay in the clear:
- Open the mail from the tax office. The instalment notice shows the exact amount and the dates to meet.
- Set the money aside as you go. A separate account, where you move a share of every payment received, keeps you from touching it.
- Pay on time, even an estimate. Paying something on the four dates always beats paying nothing.
One last marker to keep in mind: a self-employed worker has until June 15 to file their return, but any tax balance is still due on April 30. Well-managed instalments are exactly what make that balance small — or nil.