The Canada Revenue Agency sent its second batch of instalment reminders this month, and the payment they describe is due Tuesday, September 15, 2026. If a form INNS1 arrived in your mail or showed up in your CRA account in August, the question worth settling before the deadline is not whether you can afford the payment. It is whether you owe it at all.
A reminder is not an assessment. Plenty of people who receive one do not have to pay, and a smaller number who never receive one still do. Here is how the rule actually works, what September costs if you skip it, and how to stop the payments if your income has dropped.
The $3,000 rule has two conditions, not one
This is where most explanations go wrong. You have to pay tax instalments for 2026 only if both of the following are true:
- Your net tax owing for 2026 will be more than $3,000, or more than $1,800 if you were a resident of Quebec on December 31
- Your net tax owing was also above that threshold in either 2025 or 2024
One year over the line is not enough. If 2026 is the first year you have crossed $3,000, you do not owe instalments for 2026. You will simply pay the balance when you file, and instalments become an issue for 2027.
Net tax owing is not your tax bill
Net tax owing is the tax you owe for the year after subtracting income tax already withheld at source and any refundable credits. It is the number at the bottom of your return, not the total tax you paid.
Someone earning $95,000 in salary with normal payroll withholding has a large annual tax bill and a net tax owing near zero. They will never see an instalment reminder. A retiree drawing $70,000 from a RRIF with minimal withholding elected can have a far smaller tax bill and a net tax owing of $8,000. They will.
If you are not sure where you will land for 2026, run the numbers through our tax calculator and compare the result against the tax you have actually had withheld so far this year.
Why September is the instalment that catches people out
The CRA sends two instalment reminders a year, both on form INNS1:
- February reminder covers the March 15 and June 15 payments
- August reminder covers the September 15 and December 15 payments
For a lot of people, the August reminder is the first one they have ever received. That happens when the return CRA assessed most recently pushed them over the threshold for the first time. When that is the case, the agency does not bill you for the March and June payments after the fact. It compresses the year into the two remaining dates instead.
If your August reminder makes no mention of a March or June 2026 payment, the amounts work out as follows:
- No-calculation option: pay the amount printed in box 2 of the reminder on September 15, and again on December 15
- Prior-year option: work out your 2025 net tax owing, add any CPP contributions payable and any voluntary EI premiums, then pay 75 percent on September 15 and 25 percent on December 15
- Current-year option: do the same using your estimate of 2026, then pay 75 percent and 25 percent on the same two dates
That 75 percent is the reason September stings. It is a first-time obligation for many people and it is three quarters of a year’s instalments landing in one payment.
2026 instalment due dates
| Due date | Day | Covered by |
|---|---|---|
| March 15, 2026 | Sunday, so the 16th was accepted as on time | February reminder |
| June 15, 2026 | Monday | February reminder |
| September 15, 2026 | Tuesday | August reminder |
| December 15, 2026 | Tuesday | August reminder |
When a due date falls on a Saturday, Sunday or public holiday recognised by the CRA, a payment received the next business day still counts as on time. September 15, 2026 is a Tuesday, so there is no grace this quarter.
Two exceptions to the quarterly schedule are worth knowing. If your main source of income is self-employment from farming or fishing, you get one reminder in November and one payment date, December 31. And if someone who owes instalments dies during the year, instalments falling due on or after the date of death do not have to be paid.
The three calculation options, and which one actually protects you
You are free to use whichever of the three produces the lowest correct payment. They are not ranked, and CRA does not object to you choosing the cheapest.
No-calculation option
Pay the figure the CRA printed on your reminder. The agency calculates it from your most recently assessed return.
This is the only option that is interest-proof no matter how the year turns out. Pay the box 2 amount in full and on time and the CRA will not charge instalment interest, even if your actual 2026 tax ends up much higher than the reminder assumed. That protection is the whole reason the option exists, and it is worth more than most people realise. Best when your income, deductions and credits are roughly steady year to year.
Prior-year option
Base the payments on your 2025 net tax owing, plus any CPP contributions payable on self-employment income and any voluntary EI premiums. Useful when 2025 looked like 2026 will, but 2024 was unusual, since the no-calculation figure blends both years and can overcharge you.
Current-year option
Base the payments on your own estimate of 2026. This is the one to use when your income has genuinely fallen, but it carries the most risk: if you make your payments on time and the estimate still turns out too low, interest applies to the shortfall.
The practical advice is to leave yourself a cushion. An estimate that is 10 percent conservative costs you a little cash flow. An estimate that is 10 percent optimistic costs you interest at 7 percent compounded daily.
What skipping September 15 actually costs
Instalment interest is charged at the CRA’s overdue rate, which is the prescribed rate plus four percentage points. For the third quarter of 2026, running July 1 to September 30, the prescribed rate is 3 percent and the rate on overdue tax is 7 percent. It has now held at 7 percent for five consecutive quarters. The rate is reset every three months, so the figure that applies to a shortfall carried into 2027 may differ.
Interest compounds daily from the day the payment was due until your balance due date, April 30, 2027.
Take a required September instalment of $4,000 that you simply do not pay. From September 15 to April 30 is 227 days. At 7 percent compounded daily, that is roughly $178 in interest. Not catastrophic, but it is money for nothing, and it is not tax deductible.
Three conditions all have to be met before the CRA charges you anything: you have to be required to pay instalments for 2026, you have to have received a 2026 reminder showing an amount, and you have to have paid late, paid short or paid nothing. The CRA also drops the charge entirely if the calculated amount comes to $25 or less.
The penalty is smaller than most sites suggest
There is a separate instalment penalty, but it only applies when your instalment interest for the year exceeds $1,000. The calculation runs like this:
- Take the higher of $1,000, or 25 percent of the instalment interest you would have paid had you made no instalment payments at all
- Subtract that from your actual instalment interest for the year
- Divide the remainder by two
Worked through, the penalty is far less alarming than the phrasing implies. Skip every 2026 instalment on total net tax owing of about $18,600 and your interest crosses $1,000, which puts you in penalty territory for the first time. The penalty at that point is roughly $40.
Scale it up and it does start to matter. Skip everything on net tax owing of $50,000 and the interest comes to about $2,700 with a penalty of about $850, for roughly $3,550 in total. Once instalment interest passes $4,000 the 25 percent branch takes over from the $1,000 floor and the penalty settles at 37.5 percent of the interest.
The honest summary: for most individuals the interest is the real cost and the penalty is a rounding error. That flips only for large shortfalls.
You can offset a late payment by paying the next one early
This is the most useful and least advertised feature of the system. Early or overpaid instalments earn credit interest, and the CRA nets that credit against interest charged on late or short payments in the same year.
So if you miss September 15 by three weeks, paying December’s instalment early, or overpaying it, genuinely reduces what you owe. Paying ahead of a deadline is never penalised. If you have already missed September, do not conclude the year is written off.
Quebec residents pay two separate sets of instalments
The CRA collects income tax instalments for the federal government and on behalf of every province and territory except Quebec. If you live in Quebec, you may have to pay the CRA and Revenu Québec.
The Revenu Québec test mirrors the federal one at a lower threshold: you make instalments if you estimate your net income tax payable for the current year will exceed $1,800 and it exceeded $1,800 in either of the two preceding years. The due dates are the same four, and Revenu Québec sends its own form, TPZ-1026.A-V, in February and August.
Two reminders in August therefore means two payments on September 15, not one. Our Quebec marginal rate tables can help you work out the provincial side.
Who typically ends up owing instalments
- Self-employed people and sole proprietors, who have no withholding at all and also owe CPP contributions on their net business income
- Landlords, where rental profit arrives with no tax taken off
- Retirees drawing RRIF, pension or annuity income who elected minimal withholding, often the single most common trigger
- Investors with meaningful dividend income or realised capital gains outside registered accounts
- Employees with a large second income stream, including commission earners and anyone whose side income is not covered by payroll deductions
The pattern is the same in every case: income arrives without tax taken off it. If you want to see how much of a given income level should be going to tax in the first place, our guide to marginal and average tax rates explains why the rate on your next dollar is not the rate on your whole income.
How to pay before September 15
- Online banking: add “CRA (revenue) tax instalment” as a payee and use your SIN as the account number. Allow a few business days for the payment to reach the CRA
- CRA My Account: pay directly by Interac Debit, Visa Debit or Debit Mastercard
- Pre-authorised debit: set it up once in My Account and the quarterly amounts come out automatically. This is the fix if the problem is forgetting rather than affording
- In person at your financial institution with a remittance voucher
The payment date that counts is the date the CRA receives the money, not the date you send it.
How to reduce or stop your instalments
If you received an instalment reminder for 2026 but your 2026 net tax owing will be $3,000 or less, or $1,800 or less in Quebec, you do not have to pay. The reminder does not create the obligation. You do not need to notify the CRA, though you should keep the calculation that supports your decision.
If you received an August reminder only, you can reduce or stop the payments when either the instalments you have already made this year will cover your estimated 2026 net tax owing, or your 2026 net tax owing will come in under the threshold.
You can also reduce future instalments by increasing tax withheld at source. Filing a request to have more tax deducted from Old Age Security, CPP, a pension, a RRIF or employment income cuts your net tax owing directly, and enough withholding takes you out of the instalment system entirely.
Frequently asked questions
I got a reminder but my income dropped. Can I pay less?
Yes. Switch to the current-year option and base your payment on your own estimate of 2026. If that estimate puts your net tax owing at $3,000 or less, or $1,800 or less in Quebec, you can stop paying altogether. The risk is that if you make the payments on time and your estimate turns out too low, interest applies to the shortfall, so build in a margin.
Are instalments an extra tax?
No. They are prepayments of tax you would owe anyway. Every dollar you send is credited against your 2026 return. If you overpay, the difference comes back as a refund.
I never received a reminder. Do I still have to pay?
Technically you can meet the two-part test without being sent a reminder, but the CRA only charges instalment interest if you were sent a 2026 reminder showing an amount to pay. In practice, no reminder means no interest exposure. You will still owe the full balance on April 30, 2027.
What if I pay the September instalment late?
Interest runs from September 16 at the prescribed overdue rate, compounded daily. Pay as soon as you can and consider paying the December instalment early, since the credit interest that earns is netted against what you owe.
Does paying instalments mean I have to file differently?
No. You report the total instalments paid during the year on your return and the amount is credited against your tax payable. The CRA lists your instalment payments in My Account if you need to confirm the total.
Do I owe GST/HST instalments too?
That is a separate system with its own thresholds and dates. Being required to pay income tax instalments does not by itself mean you owe GST/HST instalments, and the reverse is also true.
Rates and thresholds in this article are current as of August 2026 and verified against the Canada Revenue Agency and Revenu Québec. The CRA’s prescribed interest rate is reset every quarter. This is general information, not tax advice for your situation.