Many tax payers have heard about paying taxes in instalments but often assume that this is just for the big Corporations who have a lot of tax to pay. You may be surprised to learn that technically if you net taxes owing in 2013 plus 2012 or 2011 is more than $3,000. you should be paying in instalments, however once again there are exceptions, rules and regulations surrounding this law, depending on your circumstance. For example, different rules apply to farmers and fishing income.
The amount you may have to pay in instalments is based on your net tax owing. What these payments are is your net tax payable broken down into period payments throughout the year which you would have normally paid in a lump sum on April 30th when you filed your yearly taxes.
It can get confusing for some individuals. They may have had a change in circumstances during a tax year which put them in a situation where their net tax payable was over the $3,000. But doesn’t mean it will be the same for the next year. If you are in a situation where you think you should be paying by instalments, then be sure to talk to your Toronto tax accountant about this.
Some people think that when they are paying in instalments that they are paying their taxes in advance, but according to the CRA this is not the case. You are merely paying your taxes throughout the year as you are earning your income. There are set dates that instalments have to be paid by.
Instalment payments are usually due 4 times a year, and the CRA will issue specific dates for these. If you happen to miss a payment, don’t worry, the government will not hesitate to send you a reminder. There are a lot of rules to follow for installment payments, and different options that you have for calculating your payments. Fortunately, if your situation does change throughout the year where your tax payable will be less than the $3,000., then you don’t have to make the instalment payment.
If you really want to save yourself a lot of hassle and second guessing as to whether you should be paying by instalments then why not put your tax matters in our hands here at Toronto accountant. This is just one of many potential tax issues that Canadian tax payers can be faced with, and we make sure that your taxes are done right and to your best advantage.
