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 Quebec (see the table
“Provincial Income Tax Instalments”). 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”).
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
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