Sunday’s= Personal Tax
September 15th marks the date the third personal income tax installment for 2017 is due.
Installments cause much confusion. Here is the cheat sheet:
If you don’t pay an installment you were asked to pay and you owe tax when you file your 2017 personal tax return, then Canada Revenue Agency (CRA) is going to charge you interest. This interest is charged up to the amount you owe. So if they ask for instalments of $4,000, which you do not pay and you end up owing $1,500, you will pay installment interest on $1,500. This interest is not deductible.
If you don’t pay the installment and you don’t owe any tax when you file your 2017 tax return then there is no interest.
If you pay the installment and you don’t owe the tax then you get a refund of the instalments you paid, plus interest, which you will have to declare as income.
Some people will be receiving their first notice that CRA wants installments. The way that this happens is when you owe personal income tax of more than $3,000 when you file your personal income tax return, for two years in a row. CRA prefers to receive their money up front so for people who do not have enough tax taken at source CRA will eventually notice this and send a bill.
My recommendation is this — if you get a request to make installments and you have the money, you should send it in. It is cheaper to pay the money than to pay the interest and if you don’t owe the money you will get it back.
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