GST/HST Instalments: Who Pays, When, and How Much

If your business collects GST/HST, you are used to remitting the net tax when you file your return. But once your net tax exceeds a certain threshold, the CRA expects you to pay in quarterly instalments throughout the year instead of one lump sum at filing time.

This guide explains who needs to make instalment payments, how to calculate them, when they are due, and what happens if you miss one.

Who Needs to Pay GST/HST Instalments?

You are required to make quarterly GST/HST instalment payments if all of the following apply:

1. Your net tax for the current year is $3,000 or more
2. Your net tax in the previous year was $3,000 or more
3. You are an annual filer (your reporting period is 12 months)

Net tax means the total GST/HST you collected minus the input tax credits (ITCs) you claimed. It is the amount you would owe the CRA at the end of the year.

If you file monthly or quarterly, you already remit GST/HST throughout the year, so instalments do not apply to you. Instalments are specifically for businesses that file annually but owe significant amounts.

The $3,000 Threshold

The $3,000 threshold applies to both the current and prior year. If your net tax drops below $3,000 in either year, you are not required to make instalments for that period.

Prior Year Net Tax	Current Year Net Tax	Instalments Required?
$4,200	$3,800	Yes
$2,500	$4,000	No (prior year below $3,000)
$3,500	$2,800	No (current year below $3,000)
$1,800	$2,200	No (both below $3,000)

Important: Even if you are not required to pay instalments, you can still make voluntary instalment payments. This can help you avoid a large tax bill at year-end and manage cash flow.

Instalment Due Dates

GST/HST instalments are due quarterly, within one month after the end of each fiscal quarter:

Fiscal Quarter Ending	Instalment Due Date
March 31	April 30
June 30	July 31
September 30	October 31
December 31	January 31

These dates assume a calendar fiscal year (January 1 to December 31). If your fiscal year starts on a different date, adjust accordingly. Each instalment is due one month after the end of the quarter.

If a due date falls on a weekend or public holiday, your payment is due the next business day.

How to Calculate Your Instalments

The CRA allows three methods for calculating your quarterly instalment amounts. You can choose whichever method works best for your situation.

Method 1: Prior Year Method

Divide your prior year's net tax by four. Pay that amount each quarter.

Example: Your net tax in 2025 was $8,000. Each quarterly instalment for 2026 is $8,000 / 4 = $2,000.

This is the simplest method and the one the CRA uses when it sends instalment reminders. It works well if your revenue is stable year over year.

Method 2: Current Year Estimate

Estimate your current year's net tax and divide by four. Pay that amount each quarter.

Example: You expect your 2026 net tax to be $6,000. Each instalment is $6,000 / 4 = $1,500.

This method is useful if your business revenue has decreased and you want to avoid overpaying. However, if you underestimate and your actual net tax is higher, you may owe instalment interest.

Method 3: Prior-Year Adjusted Method

Use a combination of two prior years to calculate instalments. For the first two quarters, base your payment on the net tax from two years ago, divided by four. For the last two quarters, use the prior year's net tax minus the first two payments, divided by two.

This method is less commonly used but can be helpful if your income fluctuates significantly between years.

Which Method Should You Choose?

Situation	Recommended Method
Revenue is stable year to year	Prior year method
Revenue is declining this year	Current year estimate
Revenue is growing this year	Prior year method (avoid underestimating)
Revenue fluctuates significantly	Prior-year adjusted or current year estimate

The CRA will not penalize you for using any of the three methods, as long as your payments meet the minimum required under at least one method.

What Happens If You Miss an Instalment

Instalment Interest

If you miss an instalment payment or pay less than the required amount, the CRA charges instalment interest on the shortfall. The interest rate is the CRA's prescribed rate, which changes quarterly and is based on the Government of Canada treasury bill rate plus 4%.

Interest is calculated from the instalment due date to the earlier of:

• The date you make the payment
• Your filing due date for the annual return

Interest compounds daily, so the longer you wait, the more it accumulates.

Instalment Penalty

On top of interest, the CRA may charge an instalment penalty if your instalment interest for the year exceeds a certain threshold. The penalty applies when the instalment interest exceeds the greater of $1,000 or 25% of the interest that would have been payable if no instalment payments had been made. The excess amount is then divided by four to determine the penalty.

In plain terms: if your instalment interest is relatively low (under $1,000) or you made most of your required payments, you are unlikely to face a penalty. The formula is designed to be more punitive for those who made no payments at all versus those who made partial payments.

How to Avoid Interest and Penalties

• Pay on time, even if you estimate. A partial payment is better than no payment.
• Use the prior year method if you are unsure of your current year income. The CRA will not charge interest if your instalments match the prior year calculation.
• Set up pre-authorized payments through CRA My Business Account to automate quarterly payments.
• Track your net tax throughout the year so you can adjust your instalments if your revenue changes significantly.

How to Make Instalment Payments

You can make GST/HST instalment payments through several channels:

• CRA My Business Account — online payment through your financial institution
• Pre-authorized debit — set up automatic withdrawals through CRA My Business Account
• At your financial institution — use the GST/HST remittance form (RC158)
• By mail — send a cheque with remittance form RC158 to the CRA

When making a payment, ensure it is coded as a GST/HST instalment payment, not a regular remittance. This ensures the CRA applies it correctly.

Instalments and Your Annual Return

When you file your annual GST/HST return, you report your total net tax for the year and subtract any instalment payments you made. The difference is either:

• A balance owing — if your instalments did not cover your full net tax
• A refund — if your instalments exceeded your net tax (this can happen if your revenue decreased)

Your instalment payments are reported on your GST/HST return. Keep records of all payment confirmations.

Key Takeaways

• The $3,000 threshold in both the current and prior year triggers the instalment requirement
• Instalments are due quarterly, one month after each fiscal quarter ends
• Three calculation methods are available: prior year, current year estimate, and prior-year adjusted
• Interest is charged daily on late or insufficient instalments
• An additional penalty applies if instalment interest exceeds $1,000
• Voluntary instalments are always allowed and can help manage cash flow even if you are below the threshold

Sources

1. CRA — Instalment payments for GST/HST
2. CRA Guide RC4022 — General Information for GST/HST Registrants
3. CRA — Prescribed interest rates
4. CRA My Business Account