Federal Income Tax Instalments  /  99

(4) Corporations, other than eligible CCPCs, must calculate and pay monthly instalments for 

Parts I, VI, VI.1 and XIII.1 tax using one of the following three methods:

• Current year estimate—1/12 of the estimated tax liability for the current year
• Preceding year method—1/12 of the preceding year’s tax liability (first instalment base),

or

• Second preceding year method—1/12 of the second preceding year’s tax liability (second

instalment base) for the first two months, and for the remaining 10 months, 1/10 of the 

difference between the first instalment base and the total of the first two payments.

       For all three methods, a corporation must also include the tax liability associated with each 

applicable province and/or territory, other than Alberta and Québec (see the table “Provincial 

Income Tax Instalments”). For Ontario, the federal and provincial governments signed a 

tax collection agreement under which the federal government collects and administers 

Ontario’s corporate tax system (see the table “Ontario Harmonization”). As a result, for tax 

years ending after 2008, corporations that have a permanent establishment in Ontario need 

to send combined Ontario and federal corporation tax payments to the Canada Revenue 

Agency (CRA). When calculating instalment payments for these years, the federal payments 

must also include Ontario corporate income and minimum taxes (see the table “Ontario 

Corporate Minimum Tax (CMT)—At a Glance”). Ontario’s capital tax liability was eliminated 

on July 1, 2010.
A special adjustment to the tax instalment base is required where at least one of the two 

preceding taxation years is a short fiscal year.

(5) Eligible CCPCs (discussed in note (3)) will calculate their quarterly instalments for Parts I, VI, 

VI.1 and XIII.1 tax using one of the following three methods:

• Current year estimate—1/4 of the estimated tax liability for the current year
• Preceding year method—1/4 of the preceding year’s tax liability (first instalment base), or
• Second preceding year method—1/4 of the second preceding year’s tax liability (second

instalment base) for the first instalment, and for the remaining three payments, 1/3 of 

the difference between the first instalment base and the first payment.

       See the comments in note (4) for the payment of provincial and/or territorial taxes.
       A special adjustment to the tax instalment base is required where at least one of the two 

preceding taxation years is a short fiscal year

(6)   Corporations may redirect tax instalments that have already been made to a different 

taxation year. It may also be possible to transfer amounts to another account of the 

corporation or to an account of a related corporation. However, a payment cannot be 

transferred after the taxation year has been assessed. Transferred payments will keep their 

original payment date for purposes of calculating interest charges.

Tax Instalment  

Choices

General Monthly 

Payments

Eligible CCPC Quarterly 

Payments

Current year estimate

1/12 on monthly due date

4,6

¼ on quarterly due date

5,6

Preceding year method1/12 on monthly due date

4,6

¼ on quarterly due date

5,6

Second preceding  

year method

First 2 months based on 

second preceding year,  

and remaining 10 months 

based on prior year

4,6

First payment based on second 

preceding year, and remaining three 

payments based on difference 

between instalment base and first 

payment

5,6

Current as of September 30, 2013

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