On September 30, you have to pay any income taxes owing on your 2019 personal income tax returns.
You will not be charged penalties and interest, as long as you make the payment and file the return by the September 30 deadline.
September 30 is also the deadline for catching up with the June 15 and September 15 quarterly personal tax instalments.
You might not be required to make tax instalments for 2020 if the income for this year compared to last year decreased substantially. You are required to make instalments for 2020 if your “net tax owing” will be more than $3,000 and was also greater than $3,000 in either 2019 or 2018. The ”net tax owing” is your total tax plus CPP and EI on self-employment income less any income taxes withheld at source.
You have three options to determine the amount you have to pay for instalments.
- Pay the amount CRA tells you to pay. It is a straightforward option if your income over the last three years has remained the same.
- The 2019 income option. You can base the instalment payments on your last year’s income. It is the best option if your 2020 income is similar to your 2019 income but vastly different from your 2018 income. One example is that you paid tax on a large capital gain in 2018.
- The 2020 income option. You estimate your income tax for this year and pay one-quarter of the estimate on each instalment date. You would choose this option, for instance, if your Professional Corporation in the prior years paid you exclusively dividends, which are not subject to source deductions and you switched this year from dividends to salaries.
