See the sourced 2026 Ontario tax guide: rates, limits and deadlines →
What to take away
- Most corporations pay instalments monthly; some eligible small CCPCs with a perfect compliance history can pay quarterly. The CRA does not send reminders, so the corporation must calculate and track its own payments.
- You can base instalments on this year’s estimate, last year’s tax, or a combination of the previous two years. Using a prior-year basis and paying on time generally avoids instalment interest.
- No instalments are required in the first tax year, or when tax payable is $3,000 or less in the current or previous year, but any tax owing is still due on the balance-due day.
What a corporate instalment is
An instalment is a partial payment toward the corporation’s total tax for the year, made before the year is over. The CRA says corporations are generally required to pay in monthly or quarterly instalments. The standard calculation covers federal income tax and the provincial or territorial tax the corporation pays through its T2 return. Ontario is in that group. Corporations with taxable income in Quebec or Alberta pay those provinces’ taxes directly to them.
Instalments are advance payments, not the final bill. Whatever tax remains unpaid after your instalments is due on the balance-due day, which is generally two months after the tax year ends. Some CCPCs qualify for three months. Our article on choosing a fiscal year-end and the balance-due day entry explain how those dates are set.
Who does not have to pay instalments
The CRA lists three situations. In the first tax year after incorporation, you generally do not pay instalments for the main corporate taxes; you pay what you owe by the balance-due day. If tax payable is $3,000 or less in either the current or the previous tax year, you do not have to pay instalments. And you do not pay an instalment for a tax year shorter than one month, or, for an eligible small CCPC, shorter than one quarter.
Two cautions apply. You may need to start instalments in your second year before you have paid the first year’s balance or filed the first return, so settle the year-end early to avoid misallocated payments. And the $3,000 test uses tax payable before certain adjustments, so ask your accountant to apply it rather than guessing from the bank balance.
Monthly or quarterly
Monthly is the default. A corporation can pay quarterly only if it meets all of these conditions: it is a CCPC, it has a perfect compliance history, and together with any associated corporations it had taxable income of $500,000 or less and taxable capital employed in Canada of $10 million or less for the current or previous year.
The CRA treats a compliance history as perfect when, over the 12 months before the last instalment was due, the corporation remitted GST/HST, payroll source deductions, CPP contributions and EI premiums on time and filed all required income tax and GST/HST returns on time. A late payroll remittance can therefore affect your instalment schedule. If eligibility is lost mid-year, the corporation may still pay the next quarterly instalment and then moves to monthly payments.
When the payments fall due
The first instalment is due one month less a day from the first day of the tax year for monthly payers, or one quarter less a day for quarterly payers. Later payments fall on the same day of each following month or quarter. For a calendar-year corporation, the CRA’s example is monthly payments on the last day of each month, or quarterly payments on March 31, June 30, September 30 and December 31. A corporation with a different year-end has different dates.
If a due date falls on a weekend or a public holiday the CRA recognizes, a payment received by the next business day is on time. You can view your dates in My Business Account, or in Represent a Client if you are an authorized representative. If you use pre-authorized debit, the CRA says to schedule the first payment at least five business days before it is due.
The three ways to calculate
Option 1 uses an estimate of the current year’s tax: one-twelfth of it each month, or one-quarter each quarter. Option 2 uses the previous year’s tax in the same way. Option 3 mixes the two earlier years: the first two monthly payments (or the first quarterly payment) are based on the tax from the year before last, and the rest is the previous year’s total less those payments, spread over the remaining periods. Option 3 always totals the same as option 2, but it is often chosen because early payments are lower.
You may choose whichever option gives the lowest amount payable by instalments. The CRA provides three worksheets, and My Business Account has a calculator. You do not file the worksheets with the T2 return, but keep them with your records.
Interest and penalties
Instalment interest applies when instalments are required and you pay nothing, pay late or pay too little. Interest is compounded daily at a rate that changes every three months. The CRA measures it using whichever calculation option produces the least interest, and charges nothing if the amount is $25 or less.
Option 1 carries the risk. If your estimate was too low, and a prior-year option would have required higher payments, you can be charged interest even though you paid on time. With option 2 or 3, paying the right amounts on time means no instalment interest, even if a large balance is due at year-end. A penalty applies only when instalment interest exceeds $1,000. The CRA subtracts the greater of $1,000 or 25% of the interest that would have applied with no instalments, then halves the difference. Overpaying or paying early can earn credit interest, which is not refundable and offsets instalment interest for the same year only.
An illustrative example
Suppose, using round numbers, a calendar-year CCPC that qualifies for quarterly payments had tax payable of $12,000 in 2025 and $4,000 in 2024. Under option 2 it pays $3,000 on each of March 31, June 30, September 30 and December 31 of 2026. Under option 3 it pays $1,000 on March 31 and about $3,667 on each of the three later dates. Both total $12,000. This is illustrative only and ignores other taxes.
If a big contract lifts 2026 tax to $30,000, the instalments are still enough to avoid instalment interest, but about $18,000 is due on the balance-due day. Setting aside cash for that amount, rather than assuming instalments cover everything, is the practical lesson. A cash forecast makes the gap visible.
Changing amounts and what to bring
You can change your instalments during the year by recalculating and paying the new amounts. You do not notify the CRA. The CRA suggests raising payments if you chose option 1 and now expect higher tax. If tax will be lower than estimated, you need not recalculate but may be able to reduce payments. Mergers, transfers and rollovers can require a recalculation, so tell your accountant about them.
Bring your last two T2 returns and notices of assessment, a year-to-date income statement, any planned bonuses or dividends, details of associated corporations and your record of instalments paid. Ask which option the corporation is using, who schedules the payments and when the estimate will next be reviewed.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Corporate income tax payments: Who has to pay in instalmentsCanada Revenue Agency
- Corporate income tax payment due datesCanada Revenue Agency
- Calculating corporate tax instalmentsCanada Revenue Agency
- Instalment worksheet instructions and examplesCanada Revenue Agency
- Changing instalment amountsCanada Revenue Agency
- How to pay corporate tax instalmentsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.