  Instalments and deductions at source |
There are currently three methods available to determine the instalments of an individual taxpayer:
- Government method
- Prior year option (1/4)
- Current year option (estimated)
Government method (No calculation method)
This option is best if the income, deductions, and credits remain about the same from year to year. The instalments payments will be calculated as follows:
The instalments for March 15 and June 15, 2024, will each equal one-quarter of the 2022 net tax owing. For the September 15 and December 15, 2024, instalments, the total amount of the March and June 2024 instalments is subtracted from the 2023 net tax owing. The remaining amount is then divided equally for the September 15 and December 15, 2024, instalments.
Provided the payments indicated on the form are made by the due dates, no interest will be charged, even if the amount of the payments subsequently proves to be insufficient.
Prior year option (1/4)
This option is best if the 2024 total instalment amount due will be similar to the 2023 amount but much more or less than it was in 2022. The amount of the instalments will be calculated as follows:
Each instalment payment will be one-quarter of the 2023 net tax owing.
Current year option (estimated)
This option is best if you expect the total instalment amount due for 2024 to be more or less than it was for 2022 and 2023.
These options allow you to choose the method to be used for determining instalments based on your preference. This feature is available in the user's defaults.
To change the instalment method indicated in the user's defaults for a particular client, use the keyword InstalMethod in that client's file. This will override the user's defaults and determine the instalment method based on the InstalMethod entry now appearing in the file.
Whether or not a taxpayer is subject to instalments depends on the threshold of net tax owing.
THRESHOLD = Net-Tax-Owed
If the threshold is greater than $3,000 ($1,800 in Quebec), the taxpayer is subject to instalments. Given that social benefits repaid are excluded from the calculation to establish the treshold, the repaid amount is not included in the Net-Tax-Owed amount carried forward.
The refundable Quebec abatement is not carried forward separately. The amount is included in the Net-Tax-Owed carried forward in the Income-Hist group.
The instalment payments are based on the taxpayer's net tax owing. It is determined as follows:
Net-Tax-Owed = Tax-Payable less Tax-Deducted.
As a rule, the instalment amounts are indicated on a form sent by the government to the individuals concerned.
IMPORTANT
If you calculate the instalment payments yourself and they turn out to be too low, the taxpayer may have to pay interest.
The following options are applicable for the keyword InstalMethod.
Government method The instalments are based on the "no calculation method" of Revenue Canada & Revenue Quebec.
March and June instalments are calculated as 1/4 of the previous year net tax owing, excluding any revisions to that liability arising from carryback of losses, investment tax credits and similar retroactive adjustments
September and December instalments are calculated as 1/2 of the current year net tax owing, (exclusive of carryback revisions,) less March and June instalments calculated.
Prior year option (1/4) The current year's earnings are used as an estimate for next year's earnings. Quarterly instalments are estimated as 1/4 of the net tax owing for this year.
Current year option (estimated)/ov The instalments are based on estimated earnings for next year. Instalment amounts are entered using the keyword Instal-Rec.
Instalments recommended /ov The tax preparer's recommendations are recorded by DT Max in the instalments schedule and on the client letter. These recommendations are entered by using the keyword Instal-Rec.
No instalment calculation Instalments will not be calculated by DT Max. A reference in the client letter will tell the client to pay instalments according to notices received from Revenue Canada and Revenue Quebec.
Enter the total amount of instalments paid to the CRA and Revenu Quebec for the tax year.
The following options are applicable for the keyword Instal-Paid.
Federal - Total instalments paid for 2023 Enter here the total amount of instalments paid to Revenue Canada for the tax year.
Federal - Instalments paid for March 2024 March instalments paid to Revenue Canada for the year following the tax year. This entry is a memo only.
Federal - Instalments paid for June 2024
Quebec - Total instalments paid for 2023 Enter here the total amount of instalments paid to Revenue Quebec for the tax year.
Quebec - Instalments paid for March 2024 March instalments paid to Revenue Quebec for the year following the tax year. This entry is a memo only.
Quebec - Instalments paid for June 2024
 See the Taxnet Pro™ T1 Line-by-Line Guide (subscription required):
Line 47600 - Tax paid by instalments
 See the CRA's general income tax guide:
Line 47556 - Return of fuel charge proceeds to farmers tax credit
Because of anticipated changes in your client's income fot the coming year, you may prefer to recommend the amount of instalments that should be made. Enter such recommended amounts using the keyword Instal-Rec . These will override DT Max's calculated amounts on the instalment schedule.
March and/or June instalments payments resulting in an overpayment may be treated in different ways. DT Max provides you with some options regarding March instalment payments and overpayment. Indicate the option desired in the user's defaults.
To alter the option indicated in the user's defaults for a particular client, enter Inst-Exceed in the keyword data of the client's file. This will override the user's defaults and apply the option indicated in the file.
Please note that a March and/or June underpayment will not adjust the following quarterly instalments. The options under Inst-Exceed will only adjust for a March and/or June overpayment.
The following options are applicable for the keyword Inst-Exceed.
Federal - Deduct from June instalment
Federal - Deduct equally from last three quarters
Federal - Deduct equally from last two quarters
Quebec - Deduct from June instalment
Quebec - Deduct equally from last three quarters
Quebec - Deduct equally from last two quarters
Ignore
Estimated amount for calculation of instalment payments.
Use the keyword Inst-Farm-Fish to indicate if the main source of income is self-employment income from farming or fishing. If the main source of income is farming or fishing, you must make only one instalment payment per year as of December 31, 2024, which corresponds to 2/3 of the net tax payable by installments
Use the keyword RefundInstalment in cases where the client has requested that their refund be transferred to next year's instalment account.
This option is only available federally to taxpayers whose return is efiled. Ensure that you do not request direct deposit of the refund if you will be requesting transfer to the instalment account.
Other federal tax deducted at source.
See the Taxnet Pro™ T1 Line-by-Line Guide (subscription required):
Line 43700 - Total income tax deducted
See the CRA's general income tax guide:
Line 43700 - Total income tax deducted
Other Quebec tax deducted at source.
Enter the federal non resident tax deducted.
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Instal-Paid