What are your instalment payment options?

You have three instalment payment options:

• no-calculation option (this option is best for you if your income, deductions, and credits stay about the same from year to year);
• prior-year option (this option is best for you if your 2012 income, deductions, and credits will be similar to your 2011 amounts but significantly different from those in 2010); or
• current-year option (this option is best for you if your 2012 income, deductions, and credits will be significantly different from those in 2010 and 2011).

If you choose the best instalment payment option for your situation, you will not overpay your tax during the year or have a large amount of tax to pay when you file your income tax and benefit return. You do not have to tell us which option you choose, even if that option requires no payments. The instalment reminders we send you are always based on the no-calculation option.

Note
Instalment payments are calculated based on:

• your net tax owing;
• any Canada Pension Plan contributions payable on self-employment and other earnings (see line 421); and
• any voluntary Employment Insurance premiums payable on self-employment and other eligible earnings (see line 430).

What is an instalment reminder?

An instalment reminder is issued to help you determine if you have to pay income tax by instalments. The reminder will suggest an amount to pay and list the payment options (see above).

In February and August, we send instalment reminders to individuals who may have to pay tax by instalments. The February reminder is for the March and June payments, and the August reminder is for the September and December payments. You can also see your instalment reminders online using My Account.

Even if we send you an instalment reminder in 2012, you do not have to make instalment payments for 2012 if your net tax owing for 2012 will be $3,000 or less ($1,800 or less for residents of Quebec).

Did you only get an instalment reminder for September and December 2012?

If you decide to use the no-calculation option, pay the amount shown in box 2 of your reminder for September 15 and December 15.

If you decide to use the prior-year option, calculate your 2011 net tax owing and add any Canada Pension Plan (CPP) contributions payable, and any voluntary Employment Insurance (EI) premiums payable. Pay three-quarters of the total on September 15 and one-quarter on December 15.

If you decide to use the current-year option, estimate your current-year (2012) net tax owing and add any CPP contributions payable, and any voluntary EI premiums payable. Pay three-quarters of the total on September 15 and one-quarter on December 15.

Note
Whichever option you choose, if you have already made a payment for the March 15 and June 15 due dates, you can subtract those amounts from your September 15 payment.

Forms and publications

• Pamphlet P110, Paying Your Income Tax by Instalments

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