Quarterly Tax Instalments for Self-Employed Individuals

 Introduction
Understanding quarterly tax instalments for self-employed individuals is essential for freelancers, contractors, sole proprietors, gig workers and incorporated professionals who earn income without automatic payroll deductions. Unlike employees, self-employed individuals are responsible for paying their own income tax, CPP/QPP, GST/HST and QST remittances. When annual taxes exceed certain thresholds, the CRA and Revenu Québec require regular instalments to ensure timely tax payments. Missing or incorrect instalments create interest charges and penalties that quickly accumulate. Many self-employed individuals do not realize they must pay instalments until they receive warning letters or instalment reminders. This guide provides a complete explanation of quarterly tax instalments for self-employed individuals so they can avoid penalties, plan ahead and maintain healthy cash flow.

Legal and Regulatory Framework
Quarterly tax instalments for self-employed individuals are mandated under the Income Tax Act and Québec’s Taxation Act. Instalments are required when a taxpayer owes more than $3,000 in net tax (federal) or $1,800 in Québec after filing their return in both:

• the current year, and
• either of the two previous years

Instalments are due four times per year:

• March 15
• June 15
• September 15
• December 15

The CRA offers three calculation methods:

1. No-calculation option — Based on CRA’s previous-year estimate

2. Prior-year option — Based on last year’s tax payable

3. Current-year option — Based on current expected earnings

Québec requires separate QST/QPP instalments using its own calculation. Understanding quarterly tax instalments for self-employed individuals means meeting both CRA and Revenu Québec obligations accurately.

Key Court Decisions
Court rulings have reinforced how strictly quarterly tax instalments for self-employed individuals must be applied. Key decisions show that:

• instalment interest is mandatory even if missed instalments were unintentional
• lack of knowledge does not remove liability
• illness or financial hardship does not automatically waive instalment interest
• taxpayers may request fairness relief, but approval is limited
• CRA is not required to send instalment reminders—responsibility rests with the taxpayer

Québec courts similarly uphold strict enforcement of instalment requirements. These rulings highlight why understanding quarterly tax instalments for self-employed individuals is a legal obligation, not a suggestion.

Why CRA Targets This Issue
The CRA monitors instalments closely because self-employed individuals are more likely to:

• underpay taxes throughout the year
• misunderstand instalment calculations
• experience fluctuating income levels
• miss deadlines or skip payments
• confuse GST/HST or QST remittances with income tax instalments

Audit and review triggers include:

• owing tax two years in a row
• large income fluctuations for gig workers
• inconsistent GST/HST filings
• unexplained drops in instalment payments
• repeated instalment interest charges

Revenu Québec also monitors its own instalment system. Because quarterly tax instalments for self-employed individuals protect government revenue, both agencies enforce rules strictly.

Mackisen Strategy
Mackisen CPA provides a structured and proactive approach to quarterly tax instalments for self-employed individuals. Our strategy includes:

• calculating instalment requirements using CRA and Québec methods
• adjusting instalments based on income fluctuations
• forecasting year-end tax payable for better cash flow planning
• reconciling GST/HST and QST obligations separately
• setting up automated reminders for March, June, September and December instalments
• advising on withholding strategies to avoid large year-end balances
• integrating instalments into broader financial planning (RRSP contributions, corporate dividends, payroll setup)
• representing clients in instalment interest relief requests when justified

This structured approach ensures self-employed taxpayers avoid penalties while maintaining financial control.

Real Client Experience
Many self-employed clients come to Mackisen after receiving CRA or Revenu Québec instalment notices for the first time. One consultant owed over $6,000 in instalment interest because they thought instalments were optional. Mackisen recalculated their payments, structured automatic transfers and prevented future penalties.

Another Québec freelancer was making GST/QST payments but not income tax instalments. Revenu Québec issued a demand. We created a full instalment plan and corrected past-year errors.

A gig-economy worker with fluctuating income struggled with the CRA’s “no-calculation” method. We developed a customized current-year instalment plan based on seasonal income.
A sole proprietor with multiple revenue sources underpaid instalments unintentionally. Mackisen recalculated amounts, filed adjustments and avoided further charges. These examples show how professional guidance improves compliance for quarterly tax instalments for self-employed individuals.

Common Questions
Self-employed individuals frequently ask:

• Do I need to pay instalments if I’m incorporated?
If you pay yourself salary, no. If you take dividends, personal instalments may still apply.

• What happens if I miss a payment?
CRA and Revenu Québec charge instalment interest—even if the mistake was accidental.

• Can instalment interest be waived?
Only through a fairness request, and only in exceptional circumstances.

• Do instalments apply to GST/HST or QST?
No—those require separate remittances.

• What if my income fluctuates?
Use the current-year method, but document calculations carefully.

These questions help clarify quarterly tax instalments for self-employed individuals.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency and protection from audit risk. When managing quarterly tax instalments for self-employed individuals, Mackisen provides complete calculation, planning and compliance services that protect taxpayers from penalties and help them maintain financial stability.