Why real estate agents get instalment notices
Salaried Canadians have income tax, CPP, and EI withheld from each paycheque by their employer, who remits those amounts to the CRA on the employee's behalf throughout the year. By the time the T1 personal income tax return is filed in April, most or all of the year's tax obligation has already been paid at source.
A self-employed real estate agent has no source deduction. Commission cheques and direct deposits arrive in full — gross of federal income tax, gross of provincial income tax, gross of CPP, and (where the agent is registered) gross of GST/HST. The full year's tax obligation is calculated only when the T1 is filed and lands on the return as a single balance owing.
Once that balance owing crosses a published threshold, CRA begins requiring the agent to prepay the next year's tax in quarterly instalments rather than waiting for the following April[2]. The instalment regime is the CRA's mechanism for matching the cash-flow pattern of source deduction onto self-employed income — collecting tax as the income is earned rather than once a year afterwards.
Agents who experience a strong commission year are the most common recipients of a first instalment reminder. The notice typically arrives by mail (or in CRA My Account) in February covering the March 15 and June 15 instalments, and again in August covering the September 15 and December 15 instalments[2].
The threshold: when instalments are required
CRA's published rule for individual taxpayers is straightforward: instalments are required when net tax owing is more than $3,000 in the current year and in either of the two preceding years[2]. For residents of Quebec, the federal threshold is $1,800, because Quebec residents pay federal and provincial income tax separately and the federal portion is correspondingly smaller[2].
Three details on the threshold mechanics:
- "Net tax owing" is the figure on the T1 return after credits and prior instalments are applied — not gross tax[2].
- Both conditions are required. A single high-income year followed by a low one may not trigger the requirement; CRA looks at a two-year window[2].
- CPP contributions on self-employment earnings count toward the net tax owing figure[2]. An agent with modest income tax but a substantial self-employed CPP contribution may cross the threshold from CPP alone.
When CRA determines instalments are required, the taxpayer receives an instalment reminder showing the suggested amount under the no-calculation method (described below). The reminder itself is not a bill — it is a notice that the quarterly obligation has been activated[2].
The three calculation methods
Per CRA, there are three options to calculate instalment payments: the no-calculation option, the prior-year option and the current-year option.[3] CRA describes each one the same way: how the amounts are worked out, and the situation it is best for.
1. No-calculation option
Per CRA, under the no-calculation option the CRA determines the instalment amounts from the latest assessed tax return and shows them on the instalment reminders it sends. Per CRA, this option is best if income, deductions and credits stay about the same from year to year.[3] Per CRA, the instalment reminders give the amount to pay and list the calculation options: the February reminder is for the March and June payments, and the August reminder is for the September and December payments.[2]
2. Prior-year option
Per CRA, under the prior-year option the payer determines the instalment amounts from the tax return for the year before. Per CRA, this option is best if the year's income, deductions and credits will be similar to those of the year before but significantly different from those of two years before.[3]
3. Current-year option
Per CRA, under the current-year option the payer determines the instalment amounts from an estimate of the current year's net tax owing, CPP contributions payable and voluntary EI premiums. Per CRA, this option is best if the year's income, deductions and credits will be significantly different from those of the two years before.[3]
How CRA charges interest across the three methods
Per CRA, instalment interest is charged on all late or insufficient instalment payments, compounded daily at the prescribed interest rate.[6] Per CRA, interest on each instalment payment that was due is calculated from the day it was due to the balance due date, based on the payment calculation option that results in the least amount of interest.[6] Per CRA, under the prior-year option and the current-year option, payments made in full by the due dates are not charged instalment interest or a penalty unless the estimated instalment amounts are too low.[3]
The four due dates
The four CRA-published instalment due dates for personal income tax instalments are[4]:
- March 15
- June 15
- September 15
- December 15
When a due date falls on a Saturday, Sunday, or public holiday, CRA treats payment received on the next business day as on time[4].
Farmers and fishers as defined under the Income Tax Act follow a different schedule — a single annual instalment due December 31[4] — but this schedule does not apply to real estate agents, whose self-employed income is business income rather than farming or fishing income.
The full 2026 calendar — quarterly instalment dates alongside the T1 self-employed filing deadline (June 15, with balance owing due April 30), the GST/HST return schedule, the T4A deadline, and the RRSP contribution deadline — is laid out in the Canadian real estate agent tax deadline calendar[9].
How to make the payment
CRA accepts instalment payments through several published channels[5]. All four route to the same taxpayer account; the choice between them is administrative.
- CRA My Account — the secure online portal for individuals. Instalment payments may be made directly from a Canadian chequing account using My Payment, or by setting up pre-authorized debit (PAD) for one or more scheduled instalment dates[5].
- Online banking through a Canadian financial institution — most major Canadian banks list "CRA (revenue) — tax instalment" (or a similarly worded payee) as a bill-payment option. The taxpayer's social insurance number is the account number[5].
- Pre-authorized debit (PAD) — set up either through My Account or by submitting Form RC366. PAD can be arranged for a single instalment or for the full schedule in advance[5].
- In person at a Canadian financial institution — using a personalized remittance voucher (Form INNS3) which CRA mails alongside instalment reminders, or which can be ordered through My Account or by phone[5].
CRA also accepts payment by credit card and select third-party payment services, though these intermediaries charge a service fee that is not refunded by CRA[5].
Whichever channel is used, CRA records the date the payment is received — not the date it was initiated. Online banking bill payments and PAD typically take 1–3 business days to post, so the initiation date and the credited date are not the same[5].
Get the Canadian Realtor Tax Cheat Sheet
Every 2025 bracket, CPP rate, GST/HST threshold, and instalment due date on one printable page — CRA-cited. We'll email it to you.
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What happens if you miss or underpay
CRA charges instalment interest on amounts paid after the due date or on amounts that fall short of the required payment[6]. The rate is the CRA-prescribed rate for amounts owed to the government, which is set quarterly and published on the CRA website[6]. Interest compounds daily[6].
The mechanics are mitigated in two specific ways:
- The offset method. CRA applies an offset-method calculation that gives credit interest for early or excess payments. A taxpayer who pays one instalment late but pays the next instalment early can reduce or eliminate the net interest charge[6].
- The $1,000 floor for the additional penalty. An additional instalment penalty applies only when the year's instalment interest exceeds $1,000. The penalty is calculated as 50% of the amount by which the interest exceeds $1,000[6]. For most agents with modest underpayments, instalment interest stays below $1,000 and no separate penalty applies.
Instalment interest is separate from the late-filing penalty and the late-payment interest that apply when the T1 itself is filed late or when the April 30 balance owing is paid late[10]. A taxpayer can be current on instalments but late filing, or current on filing but behind on instalments — the two charges are calculated independently.
Instalment interest is not deductible. Unlike business expenses claimed on Form T2125, interest on overdue instalments cannot be used to reduce taxable income[6].
Tracking your estimated instalment obligation through the year
Instalments paid through the year are claimed on line 47600 of the T1 return[8]. CRA mails Form INNS1 (Instalment Reminder) and Form INNS2 (Instalment Payment Summary) showing the agency's record of instalments received; agents who paid an amount not yet reflected on those forms add the difference manually to line 47600 when filing[7].
Agent Runway's quarterly figure is one quarter of its tax engine's estimate for the current year: federal income tax, provincial income tax and CPP contributions (QPP in Quebec) on projected net business income. An estimate of the current year's tax is what CRA's current-year option is calculated from. The engine counts self-employment income only, so its figure is not CRA's net tax owing for a person with other income, tax withheld at source or other credits. The estimate updates as transactions and expenses are recorded, so the figure shown in early September reflects income recorded through August.
The free Canadian Realtor Tax Estimator produces an annualized tax figure from a single GCI input, broken down into federal income tax, provincial income tax, CPP, and HST. Dividing the resulting total by four approximates a current-year-method instalment figure for planning purposes — useful for agents whose first instalment reminder is still months away, or who are estimating obligations under the current-year option.
The mechanics of how the three methods interact with each other, and how an agent's choice of method affects full-year planning, are explored further in the tax planning guide for Canadian real estate agents.