Do you want to reduce or elimate the amount of instalment payments you have to make?

You can reduce the amount of your instalment payments, or you may not have to make instalment payments at all, if you reduce your net tax owing. You can do this by having tax withheld, or by increasing the amount of tax withheld, from certain types of income.

To have income tax withheld from Old Age Security or Canada Pension Plan benefits, send a completed Form ISP3520, Request for Income Tax Deductions, to your Service Canada Office. You can also get the form by calling 1-800-277-9914.

To have tax withheld from employment income or for pension benefits from an employer-sponsored pension plan, give a completed Form TD1, 2012 Personal Tax Credits Return, to your employer or pension plan administrator.

Income tax cannot be withheld from certain types of income, such as self-employment, investment, and rental income, and capital gains.

Example
Hugh, a resident of Alberta, pays his tax by instalments. He decides to have more tax withheld from his income in 2012. His net tax owing has been $3,500 for several years, and he expects it will stay the same in 2012. In January 2012, Hugh gave his pension plan administrator a completed Form TD1 that stated he wants an extra $250 withheld each month from his pension income.

Hugh now estimates his net tax owing will be $500 for 2012. Based on his estimate, he does not have to make instalment payments in 2012 because his net tax owing will not be over $3,000 for 2012. Hugh would disregard the instalment reminders he gets for 2012.

Forms and publications

• Pamphlet P110, Paying Your Income Tax by Instalments
• Form TD1, 2011 Personal Tax Credits Return
• Form ISP3520, Request for Income Tax Deductions