Tax Instalments for Business Owners: Are You Required to Pay by September 15?

Received a CRA instalment reminder? Don’t automatically ignore—or blindly pay—it.

If you are self-employed, own a rental property, receive dividends, or operate an incorporated business, you may have recently received an instalment reminder from the Canada Revenue Agency.

The reminder deserves your attention—but the amount shown is not necessarily the exact amount you must pay.

Before making the payment, review whether instalments are still required and whether the CRA’s suggested amount reasonably reflects your expected 2026 income.

What are income tax instalments?

Income tax instalments are advance payments toward the tax you expect to owe for the current year.

Employees normally have income tax deducted from every paycheque. Business owners and other individuals may not have enough tax withheld during the year, especially when they receive income from:

• Self-employment or professional services

• Dividends from a private corporation

• Rental properties

• Investments

• Pensions or other sources without sufficient withholding

Rather than waiting until the annual tax return is filed, the CRA may require the taxpayer to pay the expected tax in quarterly instalments.

Instalments are not an additional tax. They are advance payments that will be credited against the total tax calculated on your income tax return.

Who may have to pay instalments in 2026?

Outside Quebec, an individual may be required to pay instalments if:

Their net tax owing for 2026 will be more than $3,000; and

Their net tax owing was also more than $3,000 in either 2025 or 2024.

“Net tax owing” is generally the amount still payable after considering taxes already withheld and eligible refundable credits.

For 2026, the regular individual instalment dates are:

• March 15

• June 15

• September 15

• December 15

The September and December deadlines are particularly important for people who receive an instalment reminder from the CRA in August. CRA: Required tax instalments for individuals

Does receiving a CRA reminder mean you must pay it?

Not necessarily.

The CRA generally calculates the reminder using information from previously filed tax returns. It may not know that your income, deductions, credits, or tax withholdings have changed in 2026.

For example, the suggested payment may be too high if:

• Your business income has declined.

• Your business has incurred a loss.

• You made a larger RRSP contribution.

• You have more deductible business expenses.

• More tax is being withheld from your salary or pension.

• Your 2026 net tax owing is expected to be $3,000 or less.

• Instalments already paid will cover your expected tax.

On the other hand, the CRA amount may be too low if your business income, dividends, rental income, or other taxable income has increased significantly.

This is why the reminder should be reviewed—not automatically ignored and not blindly paid.

Three ways to calculate your instalments

The CRA generally allows three calculation options.

1. No-calculation option

You pay the amounts shown on the CRA instalment reminder.

This is normally the simplest approach. If the required reminder amounts are paid in full and on time, the taxpayer is generally protected from instalment interest, even if the final 2026 tax is higher than expected.

2. Prior-year option

The instalments are based on the taxpayer’s 2025 net tax owing, including applicable CPP contributions and voluntary EI premiums.

If you received only an August reminder, the CRA’s 2026 guidance generally calls for:

• 75% of the calculated annual amount by September 15; and

• The remaining 25% by December 15.

This option may be helpful when 2025 is a more reasonable basis for estimating the current year than the older information used in the CRA reminder.

3. Current-year option

You estimate the actual net tax owing for 2026 and calculate the instalments using that estimate.

This approach can be useful when your 2026 financial results differ substantially from prior years. However, it requires careful forecasting. If the estimate is too low, the CRA may charge instalment interest.

CRA: Options for calculating instalments

Example: When the CRA amount may be too high

Suppose a consultant reported strong self-employment income in 2025. Based on that return, the CRA requests instalments of $6,000 for September and $2,000 for December.

During 2026, however, the consultant reduced operations and expects much lower taxable income. After considering deductible expenses, tax credits, CPP and taxes already withheld, the estimated net tax owing is only $2,500.

Because the expected 2026 net tax owing is below the $3,000 threshold, instalments may not be required—even though a reminder was issued.

The taxpayer should retain the income projection and supporting calculations in case the CRA later asks how the decision was made.

What happens if you pay too little or pay late?

The CRA may charge instalment interest when required payments are late or insufficient.

An additional instalment penalty may apply when the instalment interest for 2026 exceeds $1,000.

Paying the next instalment early or paying more than the required amount may help offset some instalment interest. CRA: Instalment interest and penalties

Reducing an instalment can be reasonable, but it should be supported by a reliable estimate—not simply by the amount currently available in the bank account.

Important distinction for incorporated businesses

The September 15 individual instalment deadline should not be confused with a corporation’s income tax instalments.

A corporation is a separate taxpayer. Corporations generally make monthly instalments, although an eligible small Canadian-controlled private corporation may qualify for quarterly payments.

Corporate deadlines are based on the corporation’s tax year and are not automatically September 15.

A business owner may therefore have two separate obligations:

1. Personal instalments for tax on dividends, self-employment income, rental income, or other personal income; and

2. Corporate instalments for income tax payable by the corporation.

Corporations generally do not have to make income tax instalments when the applicable corporate taxes payable for either the current or previous year are $3,000 or less. CRA: Corporate income tax payments

What should you review before September 15?

Before deciding how much to pay, consider:

Year-to-date business income and expenses.

Expected income for the rest of 2026.

• Salary and dividend payments

• Tax already deducted at source

• Rental and investment income

• Available deductions and tax credits

• Instalments already paid

• Expected CPP contributions on self-employment income

• Significant purchases, losses, or changes in the business

A short tax projection can help determine whether the CRA amount is reasonable, should be reduced, or should be increased.

The bottom line

A CRA instalment reminder is a prompt to review your tax position—it is not always a final calculation of what you owe.

Paying too little can result in interest and possible penalties. Paying substantially more than necessary can unnecessarily reduce the cash available for your business.

The better approach is to estimate your 2026 tax liability using current financial information and make an informed payment decision.

T3M Consulting can help.

Not sure whether the amount on your CRA reminder is appropriate?

T3M Consulting can review your year-to-date results, estimate your 2026 personal or corporate tax liability, and help you determine a reasonable instalment payment before the deadline.

This article provides general information and does not replace advice based on your specific tax circumstances.