Making instalment payments – Functional currency

You must make your instalment payments in Canadian currency.

There are three options you can use to calculate the least amount of tax you have to pay by instalments for the current tax year, based on the:

1. current year estimated tax payable
2. previous year tax payable (first instalment base)
3. a combination of the previous year and the year before the previous year's tax payable (second instalment base)

For all three options, you base the calculation on the total tax you have to pay under Parts I, VI, VI.1, and XIII.1 of the Income Tax Act, and the tax you have to pay to provinces and territories (other than Quebec and Alberta).

For details about Part XII.1 and XII.3 tax, see Paying instalments.

The Canada Revenue Agency (CRA) will assess your return using the option that results in the least total amount payable by instalments. You will be charged interest if you use option 1 and your estimated tax was lower than the year's actual tax and the tax calculated using option 2 or 3.