Tax instalments could become less frequent for some Canadians and corporations under a Budget 2026 proposal that would substantially raise the amount of tax owing that triggers instalment payments.
The federal government proposes increasing the threshold from $3,000 to $7,500 for corporations and individuals resident outside Quebec.
For individuals resident in Quebec, the threshold would rise from $1,800 to $4,500.
The proposed changes would apply to taxation years beginning on or after January 1, 2028.
They are not yet law and would need to be enacted before taking effect.
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Tax Instalments: How the proposed tax instalment thresholds would change
| Taxpayer | Current threshold | Proposed threshold |
|---|---|---|
| Individuals and corporations outside Quebec | $3,000 | $7,500 |
| Individuals resident in Quebec | $1,800 | $4,500 |
The proposed thresholds are 2.5 times the current amounts.
The government also says the thresholds would be indexed to inflation and rounded to the nearest $500 after the new rules take effect.
For individuals outside Quebec, the current CRA rule generally requires instalments when net tax owing is more than $3,000 in the current year and in either of the two previous years.
The Quebec threshold is $1,800 because the federal government does not collect provincial income tax there.
Who could be affected
The change would mainly matter to people whose income is not fully covered by payroll deductions.
That can include self-employed workers, contractors, landlords, investors, people receiving certain pension income and taxpayers with capital gains or dividend income.
Most employees have income tax withheld by their employers throughout the year.
Tax instalments are more likely to apply when a taxpayer receives income without enough tax withheld at source.
Under the proposal, a taxpayer outside Quebec would generally have more room before becoming required to make instalments.
Someone whose net tax owing is above $3,000 but below $7,500 could therefore fall outside the proposed threshold, depending on the taxpayer’s results in the current and previous years.
The proposal does not eliminate the tax itself.
Any balance still owing would remain payable by the applicable balance-due date, and the government says interest and penalties could continue to apply when required instalments are late or insufficient.
What the proposal means for corporations
Budget 2026 also identifies corporations in the proposed increase for taxpayers outside Quebec.
The current CRA framework generally requires corporations to make income tax instalments during the year, with exceptions where tax payable is $3,000 or less in the current or previous year.
Corporate tax treatment can vary depending on the type of corporation, the taxes involved and the province where income is earned.
Quebec and Alberta corporations also deal directly with their respective provincial tax authorities for provincial corporate tax.
New annual payment option for some business earners
Budget 2026 proposes a separate change for individuals whose primary source of income is from a business, including professional or commission income.
Beginning with the 2028 taxation year, those taxpayers could be allowed to make one annual instalment payment instead of quarterly payments.
The proposed annual payment would equal two-thirds of combined federal-provincial net tax owing and would be due by December 31, with the remainder due on the normal balance-due date.
The measure would extend a payment arrangement currently available to individuals whose chief source of income is from farming or fishing.
What taxpayers should do now
The proposed thresholds do not change the rules for the 2026 or 2027 taxation years.
Taxpayers who currently receive CRA instalment reminders should continue following their payment schedule unless they independently determine that a different CRA-approved calculation method applies.
Individual instalments are currently due on March 15, June 15, September 15 and December 15, except for special rules affecting farmers and fishers.
The CRA says missed or insufficient instalments can result in interest and penalty charges.
People with variable business, investment or rental income may wish to review their expected 2028 income and keep records of tax withheld, instalments paid and any balance due.
Professional advice may be useful where income changes significantly from year to year.
Proposal still requires legislation
The instalment changes appear in Budget 2026’s tax-measures annex as proposed measures.
The government has not announced that the higher thresholds are already in force.
Until Parliament enacts the measure and the CRA updates its administrative guidance, the existing $3,000 threshold outside Quebec and $1,800 threshold for Quebec residents remain the relevant amounts for individual instalment calculations.
Frequently Asked Questions
When would the higher tax instalment thresholds take effect?
The proposed changes would apply to taxation years beginning on or after January 1, 2028. They are not yet in force.
What would the proposed threshold be outside Quebec?
The threshold would rise from $3,000 to $7,500 for individuals resident outside Quebec and for corporations covered by the proposal.
What would be the proposed threshold for Quebec residents?
The threshold for individuals resident in Quebec would increase from $1,800 to $4,500.
Would the proposal eliminate tax instalment payments?
No. It would raise the amount of tax owing that triggers instalments, but taxpayers who remain above the applicable threshold could still have to pay during the year.
Could some business owners make one annual instalment payment?
Yes. Budget 2026 proposes allowing individuals whose primary income source is business, professional or commission income to make one annual instalment payment beginning with the 2028 tax year.
Fact-Checked: The proposed thresholds, effective date, indexation rule and annual business-income payment option were checked against Budget 2026 and current Canada Revenue Agency guidance.
Disclaimer: This article describes a proposed federal tax measure and is not personal tax advice; the existing rules continue to apply unless legislation changes them.