Tax Alert: If You Pay Income Taxes in Instalments, Mark Dec. 15 on Your Calendar

If you pay by instalment, December 15 is the date for your last quarterly instalment in 2011 ó unless you are a farmer, in which case the date to remember is Dec. 31. It is also time to estimate income for 2012 and Canada Revenue Agency has posted on its website the booklet and forms that you and your tax advisor need.

Instalments are periodic income tax payments that cover taxes that you would otherwise have to pay in a lump sum on April 30 of the following year. Instalments are not paid in advance; they are paid throughout the calendar year in which you earn the taxable income.

According to P110 Paying Your Income Tax by Instalments, you have to pay your income tax by instalments for 2012 if your net tax owing is more than $3,000:

•  in 2012; and
•  in either 2011 or 2010.

There are exceptions. For example, different rules apply if your main source of income

in 2012 is self-employment income from farming or fishing. The guide provides more detailed information.

Also on the CRA website are the worksheets you and/or your tax advisor will need to calculate tax payable:

• T2WS1 Calculating estimated tax payable and tax credits for 2012
• T2WS2 Calculating monthly instalment payments for 2012
• T2WS3 Calculating quarterly instalment payments for 2012
• 5000-S8_5005-S8 Schedule 8 - 5013, Non-Residents and Deemed Residents of Canada 2009