Tax Instalments - 2008 -

McDonald & Co.

Bob Mcdonald CMA,ISP

15736 100 Ave N.W. Edmonton, Alberta Canada T5P 0L1
Fax (780)486-4393 -------- Phone (780)484-1133

Note: For CORPORATE INSTALMENTS

Click here Go to CorporateTax Instalments 2008

PERSONAL TAX INSTALMENTS - 2008

What are instalments?

Instalments are periodic payments of income tax that individuals pay to the Canada Customs and Revenue Agency to cover tax they would otherwise have to pay on April 30 of the following year.

Most people pay their tax by having tax withheld from their income throughout the year. However, if you receive income that has no tax withheld, or does not have enough tax withheld, you may have to pay tax by instalments. This can happen if you receive rental, investment, or self-employment income, certain pension payments, or income from more than one job.

Who has to pay by instalments?

You have to pay your income tax by instalments for 2008 if your net tax owing is more than $2,000: in 2007; and in either 2006 or 2005. However, if you lived in Quebec other rules apply. Note If your main source of income in 2007 is self-employment income from farming or fishing, different rules apply. See the section called "Farming and fishing". Net tax owing - In general, this is the amount you owe on your tax return. The items used to calculate net tax owing are listed in the chart .
You can read - CCRA's P110 Paying Your Income Tax by Instalmentson the internet. The brochure includes a calculation chart you can use to review your installment request.

PERSONAL Instalment Due Dates

1 - March 15
2 - June 15
3 - September 15
4 - December 15
PAYMENT OPTIONS

No Calculation Option - CCRA will send reminders and if you pay as they suggest no interest or penalties will be charged. The March & June requests are based on your 2006 return then adjusted for Sept & Dec based on your 2007 return.

Self Calculation Option - 2 methods - your choice.

    1. Prior Year Option - 1/4 of 2006 Actual taxes incl CPP per payment. - Instalment interest and penalties may be applied if payment low or late.
    2. Current Year Option - 1/4 of 2007 Estimated taxes incl CPP per payment. - Instalment interest and/or penalties may be applied if late or too low.


    Self Calculation SAMPLE CALCULATIONS
    Assume balance owing:
    2007 $8,000
    Expect balance for 2006 to be $1,000 less than 2005 ($8,000 - $1,000 = $7,000).
    Calculations under 2 methods:
    1) Prior year option 1/4 x $8,000 = $2,000 per Instalment
    2) Current Year Option 1/4 x $7,000 = $1,750 per Instalment
    * Any balance owing on your 2007 tax return is due on April 30, 2008.


    PENALTIES are imposed where instalments made are late or deficient. This is in addition to interest charges calculated for each day on late or deficient payments. The penalty is 50% of the interest payable on the short or missing instalments for the year minus the GREATER of a) $1,000. OR b) 25% of the interest the taxpayer would have had to pay if no installments were made during the year. Not making the required instalments can be expensive.

    How and where do you make your payments? From CCRA's Web Site

    "Each reminder we send includes two remittance forms Form INNS3 (contact us if you need more remittance forms).

    Using your remittance form, you can make your payment free of charge at your branch of a Canadian chartered bank, caisse populaire, or credit union. The teller will detach and keep the payment portion of the remittance form, and stamp and return the rest to you as a receipt.

    If you prefer, you can send a cheque or money order payable to the Receiver General (write your social insurance number and the tax-payment year on the back), and a completed remittance form to the:

    Canada Customs and Revenue Agency
    875 Heron Road
    Ottawa ON K1A 1B1

    You can now pay your income tax instalments using Internet, or telephone bill-payment services that are offered by some financial institutions. Contact your financial institution for details.

    After you have made a payment

    We will not immediately issue a receipt for a payment you make, so you should keep your cancelled cheque or bank receipt as proof of your instalment payment. A record of your payments will be shown in the "Instalment Payment Summary" section of Form INNS1, Instalment Reminder, or on Form INNS2, Instalment Payment Summary. We issue these in February and August.

    If you make a payment with a cheque that your financial institution does not honour, including a cheque on which you put a stop payment, we will charge you a fee-usually $15 for each returned cheque."

    The preceding information is for educational purposes only.
    As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this,
    a further review should be done by a qualified professional.
    Although every reasonable effort has been made to insure the accuracy of the information
    contained in this, letter, no individual or organization involved in either the
    preparation or distribution of this letter accepts any contractual, tortuous,
    or any other form of liability for its contents or for any consequences arising from its use.

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    Page maintained by R McDonald, bob@rmcdonald.com Copyright(c) 1996. Created: 23/02/96 at 9:26:04 AM Updated: 10/19/2006 at 1:25:11 PM