Canada Revenue Agency
www.cra.gc.ca
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Prior-year option
This option is best for you if your 2012 income, deductions, and credits will be similar to your 2011 amount but significantly different from those in 2010.
If you choose this option, you have to calculate your instalment payments based on your prior-year (2011) net tax owing including any Canada Pension Plan contributions payable and any voluntary Employment Insurance premiums payable. Use the Calculation chart for instalment payments to help you calculate your total instalment amount due and pay one-quarter of this amount on each instalment due date.
If you use the prior-year option and make the payments in full by their 2012 due dates, we will not charge instalment interest or a penalty unless the total instalment amount due you have calculated is too low. For more information, see Interest and penalty charges.
Example
Gayle has to pay her tax by instalments in 2012. She retired at the end of 2010 and her pension income this year will be close to what it was in 2011, but much less than her employment income was in 2010. Using her 2011 income tax and benefit return and the Calculation chart for instalment payments, she calculates that her total instalment amount due is $4,000.
Using the prior-year option, Gayle makes four instalment payments in 2012, based on her calculations, as follows:
| Instalment payments | |
|---|---|
| March 15 | $1,000 |
| June 15 | $1,000 |
| September 15 | $1,000 |
| December 15 | $1,000 |
| Total | $4,000 |
