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CRA quarterly payments
August 20, 2018
9:10 pm
AltaRed
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That may be true, but I wonder about that. Have you personally tested that theory? I know it works* if one increases their source withholding sufficiently to begin with, with the source withholding amounts on a tax slip, but with a lump sum in December I am not so sure??

The responses to post 37 were on the premise that once a taxpayer has tripped once and starts getting installment notices, the only way to escape it in the future is to have source withholding large enough to once again a year later be back within $3k. If I am going to have to increase source withholding to escape the need for installment payments, I'd just as soon pay via installment payments.

* A poster on another forum a year or two ago was able to avoid getting an installment payment trigger by requesting almost a complete 100% source withholding from his minimum RRIF withdrawal in December. Because it was source withholding and not a self-initiated separate payment, he gamed the system successfully.

August 20, 2018
10:08 pm
Loonie
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I haven't had occasion to use this strategy precisely. I do large RIF withdrawals in December, with correspondingly large withholding, and that's sufficient. I also have significant non-refundable tax credits with which to offset. So far I have not needed to do any voluntary deductions at source. Ask me again in a couple of years when my situation will likely have changed somewhat!

I can't see what difference it makes where the money comes from. It's going to be in December either way, so CRA is not going to be better off one way or the other.

I don't have the page in front of me but my recollection is that the need for quarterly payments is based strictly on whether you owe over 3K in April for X years, whatever the details are on years. I am less sure about how you extricate yourself once your're on the treadmill.
If you increase deductions at source voluntarily, there is nothing to prevent you from reducing them again when it is convenient as far as I can see, as it's based on estimated income.

I don't mind paying as you go but I hate overpaying, which was almost always the case when I was working; and I hate the nuisance of quarterly payments, which I or my attorney might forget. If necessary, I'd rather take deductions at source, e.g.CPP, but I would still try to leave an amount owing under 3K.

August 21, 2018
4:36 am
Top It Up
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Because the CRA goes to great lengths emphasizing QUARTERLY income tax instalments, personally, I would want a crystal clear understanding from them stating that a lump sum instalment EVERY December, in lieu of, is both acceptable and avoids attracting any late instalment payment interest charges.

August 21, 2018
4:57 am
2of3aintbad
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Top It Up said
Because the CRA goes to great lengths emphasizing QUARTERLY income tax instalments, personally, I would want a crystal clear understanding from them stating that a lump sum instalment EVERY December, in lieu of, is both acceptable and avoids attracting any late instalment payment interest charges.  

I can accept that if you never have had an instalment notice, a lump sum payment (or larger withholding) in December will work for a while, maybe forever. However, once you get the notice for quarterly instalments, that's a different story and I would not try it, even if someone from CRA says "that should be OK".

August 21, 2018
4:57 am
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I'm not sure it's any clearer but here's an opinion piece from BDO Canada, for it's clients, on CRA Quarterly Instalments -

BDO Tax Bulletin: Failure to Pay Tax Instalments can be costly

http://www.bdo.ca/BDO/media/Mi.....Costly.pdf

August 21, 2018
5:09 am
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2of3aintbad said

"... once you get the notice for quarterly instalments, that's a different story ..."  

I think THAT'S the key determinant in this discussion.

August 21, 2018
5:21 am
Kidd
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I have always owed money at tax time and the amount varied from 4 figures, up into the low 5 figure range.  I thought i had found a way to play the system and it seemed to have worked for a few years, until now.

The moment i had the necessary paperwork, i calculated my taxes, so i knew how much i owed.  Then, i increased my debit card withdrawal limit to cover that cost and i paid the cra online. So this was always done at the beginning of March. Then, i would mail in my tax paperwork at the very very last minute.  I had received a few notices saying that i may have to pay tax instalments but nothing ever materialized of this.

In march of 2018, i paid 5 figures to the cra by debit and just this week, i received my first installment notice... combined (sept and dec payments) the cra want another 5 figures. Sorry to say, the cents don't count as figures and here I figured i had a lot of sense.

"Sorry Charlie. Sunkist want tuna that tastes great, not tuna with great taste".

How many of you remember this sales pitch?

August 21, 2018
5:26 am
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YOUR instalment notice should have included this proviso -

1. No-calculation option

- Pay the amount in box 2 by the due date in box 1.

- If you use this option, you can reduce your September 15, 2018 payment by the amount of any instalment payments you already made for 2018. You have instalment credits for 2018 totalling $x,xxx.xx.

August 21, 2018
5:34 am
Kidd
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Top it up.

My march 2018 payment, only covered what i owed for 2017.

August 21, 2018
6:39 am
Kidd
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To clarify post 47... when i would file my paper copy return at the very last minute to the cra, my taxes owing would state $0 (zero) because i had a credit from the payment i made in March.

August 21, 2018
9:01 am
AltaRed
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Kidd said
To clarify post 47... when i would file my paper copy return at the very last minute to the cra, my taxes owing would state $0 (zero) because i had a credit from the payment i made in March.  

To my knowledge, that is not how it is supposed to work. The payment in March 2018 is an installment payment for the 2018 tax year, not 2017. Hence when you file in April 2018 for the 2017 tax year, the March 2018 payment is NOT part of the 2017 calculation.

Going back to Loonie's comment, the key is the word 'source withholding' versus a voluntary payment. Where would one put such a voluntary payment on Page 3 of Schedule 1 or Step 6 of Page 4 of the return? It is not line 476 (i.e. total of Mar 17, June 17, Sept 17 or Dec 17).

August 21, 2018
9:23 am
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Online at my bank, there are 3 Bill Payment options for the CRA, as follows -

- CRA (REVENUE) - 2017 TAX RETURN

- CRA (REVENUE) - TAX INSTALMENT

- CRA (REVENUE) - TAX AMNT OWING

I'm guessing Kidd didn't use the CRA (REVENUE) - TAX INSTALMENT option for his March 2018 payment.

August 21, 2018
1:36 pm
toto
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I'm going to buy some real estate and then my income from interest will go down and thus will be around the threshold again.
Hoping i can adjust the installments myself when that happens, and not be subject to charges from Cra. Any experiences with this situation?

August 21, 2018
1:38 pm
Loonie
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One is never required to make quarterly payments until one has owed over 3K at tax time for two years. I forget the details on how the two years are arranged, but the point is that there is no obligation until that line is crossed.

For those of you who are receiving RSP/RIF income, get your FI to take off extra tax and schedule your withdrawal for December. You will then have a place to enter it clearly on your tax form but still not pay until December. However, if you are already subject to quarterly payments, you will have to pay them as far as i can see. This is probably where a significant overpayment in December through the RSP/RIF would help, as it will reduce or eliminate the quarterly payment in future, perhaps not immediately.

Kidd would have had to have made his payment in 2017, not March 2018, in order for it to have helped him avoid quarterlies potentially.

Toto, if I were you, I would wait a year or two and just let CRA do the re-calculation regarding your changed circumstances. It's better than running the risk, less work, and less worry.

August 21, 2018
2:43 pm
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Loonie said
One is never required to make quarterly payments until one has owed over 3K at tax time for two years. I forget the details on how the two years are arranged, but the point is that there is no obligation until that line is crossed.
  

If you are in receipt of a CRA Quarterly Tax Instalment notice, I suspect the CRA has deemed you've crossed the $3,000 tax-owing threshold and unless you can prove otherwise i.e. when you file your current year T1, it's time to pay up.

August 21, 2018
4:11 pm
Top It Up
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Have to say I'm starting to find the conversation on this thread to be accelerating past hilarious - the resistance to quarterly tax instalments - like, how dare they. Taxes aren't some ugly serpent that just all of a sudden started with the instalments, the vast majority saw tax deductions at source every 2 weeks from their pay cheque ... sheesh.

You got a notice in the mail - just pay the damned bill like you do your utility bills, your property insurance and the like. The CRA even made it easy for you - JUST pay the NO calculation Option 1 online, through your bank account, and get on with your life.

August 21, 2018
7:12 pm
AltaRed
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Yes indeed! No big deal to schedule 4 transactions per year.

April 11, 2020
7:21 pm
Bill
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Just finished my 2019 paper return, ready to write a cheque, appears sending them a cheque with the return is no longer a payment option! I was probably the last one...…...

April 11, 2020
8:14 pm
AltaRed
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Bill payment via your online banking platform.

April 12, 2020
7:56 am
pooreva
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Bill said
Just finished my 2019 paper return, ready to write a cheque, appears sending them a cheque with the return is no longer a payment option! I was probably the last one...…...  

Why would you write them check NOW when they delayed payments of installments and tax due to August 31?

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