Q3 2026 — SEPTEMBER
The September 15 Tax Instalment Deadline: What Ontario Business Owners and Self-Employed Individuals Need to Know
6 min read | BBS Accounting Blog
If you pay tax by instalments, your third 2026 payment is due September 15. Here’s how CRA instalments work, how to calculate what you owe, and how to avoid interest and penalties.
If the CRA has notified you that you’re required to pay tax by instalments, September 15 marks your third instalment due date of 2026 — and it’s one of the most commonly missed or miscalculated deadlines for incorporated businesses, self-employed individuals, and investors with significant non-payroll income. Here’s what every Toronto-area taxpayer making instalments should know before the deadline.
Who Actually Has to Pay Instalments?
Generally, the CRA requires instalments when your net tax owing exceeds $3,000 in the current year and in either of the two preceding years ($1,800 for Quebec residents, which doesn’t apply in Ontario). This typically applies to: self-employed individuals and sole proprietors, owner-managers who take significant dividend income, retirees drawing heavily on RRIFs or non-registered investments without enough withholding tax, and corporations with prior-year taxes payable above the relevant threshold. If you received an instalment reminder from the CRA (Form INNS1 or INNS2, or the corporate equivalent), that notice is not optional — it reflects the CRA’s own calculation of what it expects from you.
The Three Ways to Calculate Your Instalments
The CRA gives individuals and corporations three options for calculating instalment amounts, and you’re allowed to choose whichever results in the lowest total payments without being offside:
- No-calculation option: Pay exactly what the CRA’s instalment reminder says. This is the safest option if your income is stable or rising, since it guarantees no instalment interest as long as you pay on time.
- Prior-year option: Base your 2026 instalments on your actual 2025 tax liability. This works well if 2025 was a representative year and you want a simpler calculation than estimating 2026 in real time.
- Current-year option: Estimate your actual 2026 tax liability and pay based on that. This is the best option if your income has dropped significantly in 2026, but it carries risk — if you underestimate and pay too little, the CRA will charge instalment interest calculated as if you’d used the no-calculation method.
What Happens If You Pay Late or Pay Too Little
Missing an instalment, or underpaying relative to whichever method protects you, triggers instalment interest from the date the payment was due, compounded daily at the CRA’s prescribed interest rate (which is reviewed and can change quarterly). If your total instalment interest for the year exceeds $1,000, the CRA may also apply an instalment penalty on top of the interest — a meaningful cost for what is, in many cases, simply a cash flow or planning oversight rather than an attempt to avoid tax.
Corporate Instalments Work Differently
Most corporations must pay monthly instalments, not quarterly, due on the last day of each month, based on either the prior year’s tax payable, the second-prior year’s tax payable, or an estimate of the current year. Eligible small CCPCs that meet certain conditions (including a perfect compliance history and taxable income under the small business threshold) may qualify for quarterly instalments instead — worth confirming with your accountant, since the cash flow difference between monthly and quarterly remittances can be significant.
Five Steps to Take Before September 15
- Pull your year-to-date income (or your corporation’s year-to-date results) and compare it honestly to last year.
- Decide which of the three calculation methods genuinely minimizes your payment without triggering interest.
- Confirm your CRA My Account or My Business Account instalment balance matches your own records — discrepancies happen more often than you’d expect.
- Pay through CRA My Payment, online banking (set up the CRA as a payee), or pre-authorized debit to avoid processing delays.
- If your income has genuinely dropped, document why — this protects you if the CRA later asks about the current-year method.
Looking Ahead to December 15
September 15 isn’t the last instalment of the year — most individuals and many corporations have one more due December 15. Getting your September payment right, based on an accurate read of your 2026 results, sets you up to calculate December correctly too, rather than compounding the same estimate forward.
Talk to BBS Accounting
Every business and every personal tax situation is different. If you’d like a clear, practical plan tailored to your numbers, BBS Accounting’s Toronto-based team is here to help — from corporate and personal tax planning to bookkeeping, payroll, and CRA representation.
Book a consultation: www.bbsaccounting.ca
Call us: (416) 555-0199 | Email: in**@***********ng.ca
BBS Accounting | Toronto, Ontario
This article is provided for general informational purposes only and does not constitute professional accounting, tax, or legal advice. Tax rules and CRA figures referenced are current as of publication and are subject to change. Please consult a BBS Accounting professional regarding your specific circumstances before making financial decisions.