Pay instalments through internet banking | Page 2 | Income tax filing | Discussion forum

RBC Royal Bank accepts CRA trust tax payments through personal online banking.

These are the CRA bill payees available to add:

1. CRA (REVENUE) TAX AMOUNT OWING
2. CRA (REVENUE) 2024 TAX RETURN
3. CRA CHILD AND FAMILY BENEFITS
4. CRA REVENUE TAX INSTALMENT
5. CRA T3 TRUST AMOUNT OWING
6. CRA T3 TRUST GARNISHEE
7. CRA T3TRUST INSTALLMENTS
8. CRA 2024 T3 TRUST RETURN

I am not sure about that Bill. There are advantages for a GRE estate for the first year at least (max of 36 months) to pay income taxes via a T3 Trust return, but I have always believed trust income could be passed through to beneficiaries on T3 tax slips leaving the trust with zero income tax itself to pay and thus no need for a CRA tax payment (and to find a way to pay it).

I stand corrected though if that is not the case as I have not done one of those since GRE estates came into play.

A trust always reports income it receives on its T3 return. The trust can then deduct the income it allocates to the beneficiaries and end up with less or no taxes to pay on the income. I think that done on Schedule 9 – Income Allocations and Designations to Beneficiaries.

Using Promissory Notes to Distribute Trust Income discusses when such allocations can be done by the trust. It seems to center around when the amounts involved become "payable" to a beneficiary and not necessarily paid to the beneficiary:

In order for an amount to qualify as “payable” for purposes of subsection 104(6) of the Canadian Income Tax Act, that amount must satisfy the conditions of subsection 104(24). In order for an amount to qualify under subsection 104(24) of the Canadian Income Tax Act as “payable”, the amount must be paid in that tax year to the beneficiary, or the beneficiary must be entitled in the year to enforce payment of the amount.

The first condition is self-explanatory. Where an amount is actually paid to a beneficiary, then it will be considered “payable”, and the trust will be entitled to deduct that distribution from its taxable income. Where an amount is not actually paid to a beneficiary, determining whether the beneficiary is entitled to enforce payment is more difficult to determine.
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Bill said
I've not yet found anything that specifically says a GRE trust cannot allocate income earned by the trust to beneficiaries so now I'm tending to agree with AltaRed that it could be done (assuming beneficiaries named in a Will are automatically also considered to be beneficiaries of the estate trust tax entity - ?).  

Well, yes, the testamentary trust (T3 entity) is automatically the recipient of probate-able estate assets of the deceased as determined by the Will, assuming there is a Will and it is pretty clear who the beneficiaries are and how the T3 tax slip can be prepared and income can be distributed with confidence.

I think the Executor would need to decide how confident they were in allocating trust income a specific way to distribute it to beneficiaries. In the absence of clear confidence, keep the income in the trust and have the trust pay the tax man instead on trust taxable income.

Someone dying intestate would be a different matter in which the 'testamentary trust' is in the ozone layer until courts decide who administers it and who gets what. The prudent thing then would be for the trust to pay income taxes owing on its taxable income.

Either way, as it pertains to this thread, in many?most? cases, taxable income may be kept in the testamentary trust and the trust would directly pay taxes owing. Hence some mechanism should be available through ALL, or most, banks to pay trust income. I am surprised not all banks have that option (Norman1 pointed out RBC does).

Note: I checked my Scotia bill payee options and they don't offer that. In a case like that, as an Executor, I would ask the branch to make that payment on behalf of the trust. Which brings up another point. Everyone should have a 'big boy' brick and mortar bank account to facilitate operations like this, even if it is rarely/ever used.

CRA isn't going to issue any pre-authorized debits the same day. That method is not for making last-minute or last-day payments.

This is from Pay by scheduled pre-authorized debit (PAD)…:

Pre-authorized debit (PAD) is a secure, online self-service payment option for individuals and businesses to pay their taxes and other amounts due. You set the payment amount and authorize the CRA to withdraw it from your Canadian chequing account on the date, or dates, you choose.

In CRA online secure services

Your selected first payment date must be at least 5 business days from the date you create your PAD agreement. See public holidays for a list of non-business days.
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AltaRed said
As an aside, that is the beauty of using pre-authorized credit (or debit) on all of one's recurring expenses. The onus is now on the vendor to pull the funds on the date(s) they ask for the money.  

The onus is also on us to make sure we have adequate funds in our account before any pull.

Briguy said

An even better way to pay your tax instalment is to pay through Chexy, assuming you have a Visa card that pays 3 or 4 % cashback for recurring payments. … ( The card pays 4 % cashback on recurring payments and Chexy charges 1.75% handling fee ).

That only works out if the recurring payment flag is set on the charges as expected. Otherwise, the charge won't be considered a recurring payment and one will end up paying the 1.75% fee without receiving the higher cashback for recurring payments.

People have been burned by Chexy in the past on that: With which cards can we get the recurring bill classification?

Briguy said

EVERY payment you put through Chexy is coded as a recurring bill on ALL credit cards, whether it be condo fees, personal tax, business tax, rent etc. They only take Visa and AMEX, but the only worthwhile cards to use ( besides most cards for sign up bonus period ) are Scotiabank Momentum Visa Infinite with 4% cashback and TD Cashback Visa Infinite with 3% cashback. If you bank with Scotia and have the Ultimate Chequing Package or TD and have the All Inclusive account you get the credit card for free, so definitely worthwhile.

If Chexy makes an error and the transaction don't get coded as a recurring payment then you will lose probably 0.75%, since most cards pay 1% cashback on general transactions and Chexy charges 1.75%. I've been using Chexy since April and haven't had that happen yet. Anecdotally they won't pay you back the 0.75% you lost.  

so all chexy payment even tho 'one time' which is the only option for income tax is still considered as recurring for the Scotia momemtum ? About to use it to pay my August instalment.