It happens every year; Tax Season!
People always hope that they get a tax return as opposed to a tax bill. But what happens when you get a tax bill? How do you pay it? There are a number of ways to pay when it comes time to pay your personal or business taxes. Whether you decide to pay in person or utilize the CRA My Payment online option (which allows individuals and businesses to pay taxes via the Canada Revenue Agency (CRA) website), the choice is yours. Below we’ve done a brief walkthrough of the different payment methods when it comes time to pay your CRA tax bill.
This a quick reminder of some of the important due dates including:
- filing and payment due dates
- and dates for receiving credits and benefit payments from the CRA.
Filing dates for 2022 taxes
Mar 1, 2023: Deadline to contribute to an RRSP, a PRPP, or an SPP
Apr 30, 2023 (May 1, 2022 since April 30 is a Sunday): Deadline to file your taxes
Jun 15, 2023: Deadline to file your taxes if you or your spouse or common-law partner are self-employed
Payment date for 2022 taxes
Apr 30, 2023 (May 1, 2022 since April 30 is a Sunday): Deadline to pay your taxes
How to pay taxes to the CRA
Did you know that you can pay your taxes in person at any Canada Post outlet? It’s true, head to your local Canada Post outlet and you can pay your taxes with cash or debit card. You can also go to your local bank branch and pay taxes to the CRA there.
How to pay taxes owing to CRA online via debit card?
In order to pay taxes to the CRA online, you can access it via CRA sign-in services or with CRA My Payment. This is to pay with a debit card only aka Interac Debit, Visa Debit or Debit Mastercard, you cannot pay using credit cards with My Payment. To make a payment:
- Go to CRA my payment and click pay now
- Select payment type
- Select payment allocation
- Enter your account number, period date, and amount]
- Keep your transaction receipt with a payment confirmation number
Please note that payment usually takes 1 to 3 business days to be processed by the CRA. To avoid further fees and interest charges, make sure to pay on time.
Taxes that can be paid online – Individuals
- Individual Income tax
- Balance Owing/ Arrear payments, Installment and Payments on Filing
- Child and Family Benefits Payment
How to pay taxes owing to CRA via online banking?
You can set up an online payment to electronically transfer the funds to the CRA. This can be done via your Canadian financial institution’s website or online banking app. In order to set up this type of payment:
- Sign in to your online banking
- If you are an individual, under “Add a payee” look for a relevant payee depending on the type of your payment.
- CRA (revenue) – current-year tax return
- Use this option to make a payment for your current tax return. You can use this option only once per return.
- CRA (revenue) – tax amount owing
- Use this option to pay any amount owing.
- CRA (revenue) – tax instalment
- Use this option to make payments toward the future tax year.
- CRA (revenue) – Canada emergency benefit repayment
- Use this option to repay a Canada emergency response benefit, Canada emergency student benefit, Canada recovery benefit, Canada recovery sickness benefit, or a Canada recovery caregiving benefit.
- CRA (revenue) – current-year tax return
- If you are a business, under “Add a payee” look for a relevant payee depending on the type of your payment.
- Federal – Corporation Tax Payments – TXINS
- Federal – GST/HST Payment – GST-P (GST-P)
- Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
- Federal – Canada emergency wage subsidy repayment
- Enter your social insurance number (SIN) or business number as your CRA account number.
Payments are typically received by the CRA within 5 business days. In order to avoid fees and interest, Richardson Miller LLP recommends setting up a payment in advance.
How to pay taxes owing to CRA in instalment payments?
You can pay tax in instalments to the CRA but did you know that sometimes, the CRA will request that you pay the current tax year’s taxes in instalments during the current year? What this means is the CRA may ask you to pay in instalments towards your expected 2021 taxes owning in 4 quarterly payments throughout 2021.
Here are some examples of situations where this will be requested:
Personal Income Tax: If you had a balance owing of over $3,000 in any year, you may be required to pay in quarterly instalments towards the following year’s tax bill. Usually, the dates are March 15, June 15, September 15, and December 15.
Corporate Income Tax: Usually, if your last corporate income tax owing is higher than $3,000, you may need to pay in instalments (monthly or quarterly) towards your next year’s tax bill. There are a few options to calculate your monthly and quarterly instalment payments:
- One-twelfth (1/12) of the estimated tax payable for the current tax year is due each month of the tax year.
- One-twelfth (1/12) of the tax payable from the previous tax year is due each month of the current tax year.
- One-twelfth (1/12) of the tax payable from the year before the previous tax year is due in each of the first two months of the current tax year. One-tenth (1/10) of the difference between the tax for the previous tax year and the total of the first 2 payments is due in each of the remaining 10 months of the current tax year.
- One-quarter (1/4) of the estimated tax payable for the current tax year is due each quarter of the tax year.
- One-quarter (1/4) of the tax payable from the previous tax year is due each quarter of the current tax year.
- One-quarter (1/4) of the tax payable from the year before the previous tax year is due in the first quarter of the current tax year. One-third (1/3) of the difference between the tax for the previous tax year and the first payment is due in each of the remaining three quarters of the current tax year.
If you are currently trying to make a payment arrangement with the CRA, the accountants at Richardson Miller LLP are happy to help you navigate through this tax situation. Reach out to the team today!
GST/HST Payments: In Canada, you are able to pay GST / HST owing either annually or quarterly. If your tax owing is more than $3,000 in a year, you could be told to pay quarterly payments in the following year just like personal or corporate tax income. The quarterly payments are equal to one-quarter (1/4) of your tax from the previous year.
Learn more about GST / HST and your business.
Late/ Unpaid Instalments: It can happen to any of us. Sometimes a payment is late or forgotten about. When this happens you may have to pay interest and possible penalty charges that will be applied if you do not pay your required tax instalments or paid insufficient amounts. More information about this can be found here.
We’re happy to answer your questions, clear up any confusion and get you on the right path with your personal or business taxes. Having clean, up-to-date books will make tax time so much easier for you!
Are you looking for a qualified, experienced Chartered Professional Accountant? Give us a call. We’re happy to help.
Last updated on March 15, 2023
Angela Richardson is a Chartered Professional Accountant (CPA, CGA) with more than 17 years experience working in public practice with small to medium sized businesses. While financial statements and tax returns are part of the occupation, consulting and assisting clients to achieve their entrepreneurial dreams is her true passion.