Incorporation Income Tax Payment and Penalties in Canada



Paying income tax is a fundamental responsibility for corporations operating in Canada. Failure to comply with tax regulations can result in penalties and interest charges, impacting your business’s financial health. In this informative guide, we will explore when and how corporations should pay income tax, including important due dates, payment methods, and potential penalties. Additionally, we will introduce you to Tax4Less, a trusted partner offering assistance with tax matters, including CRA representation and incorporation services starting at $375* (Conditions apply, call for details).

When and How to Pay Income Tax:

Meeting Your Tax Obligations

Corporations in Canada are required to pay income tax in monthly or quarterly instalments. However, there is an exception: if the total of Part I, Part VI, Part VI.1, and Part XIII.1 taxes payable for either the previous year or the current year is $3,000 or less, instalments may not be necessary. The balance of tax that a corporation owes for a tax year is typically due within two or three months after the end of that tax year, depending on the corporation’s circumstances.

Payment Methods:

Ensuring Timely Payments

To avoid interest and penalties, it is crucial to make payments on or before the due date. Here are several methods corporations can use to make payments:
  1. Canadian Financial Institution’s Online or Telephone Banking Services: Utilize your Canadian financial institution’s online or telephone banking services to make tax payments conveniently.
  2. CRA’s My Payment Service: The CRA offers the My Payment service, allowing you to make payments securely online. This service is accessible through the My Payment page on the CRA’s website.
  3. My Business Account: Corporations can use My Business Account to calculate and pay instalment payments or view and pay their account balance. This service streamlines the payment process for business owners.
  4. Pre-Authorized Debit: Set up pre-authorized debit payments through My Business Account for a hassle-free payment experience.
  5. Credit Card, PayPal, or Interac e-Transfer: The CRA accepts payments through credit cards, PayPal, or Interac e-transfer using third-party service providers.
  6. In-Person Payment: You can make payments in person at a Canadian financial institution or, for a fee, at a Canada Post retail outlet. You will need to use a remittance form for this method, which can be requested online through My Business Account.
Note: For payments made after 2023, electronic payments are required for remittances over $10,000.

Payment Due Dates:

Staying on Schedule

Instalment payments for various tax parts are due on the last day of every complete month of a corporation’s tax year. The first payment is due one month minus a day from the starting date of the corporation’s tax year. Subsequent payments are due on the same day each following month. Eligible small Canadian-controlled private corporations (CCPCs) have the option to make quarterly instalment payments instead of monthly ones. For detailed information, refer to Guide T7B-Corp, Corporation Instalment Guide. The balance-due day for all corporation taxes (except Part III and Part XII.6) is typically two months after the end of the tax year. However, under specific circumstances, it may extend to three months if certain criteria are met. These conditions include being a CCPC throughout the tax year and claiming the small business deduction.

Tax Matters Made Easy with Tax4Less:

Your Trusted Tax Partner

Navigating the complexities of tax compliance and payments can be challenging for corporations. That’s where Tax4Less comes to your assistance. We offer a range of expert services tailored to address your tax-related needs.
  1. Incorporation Assistance: Tax4Less can guide you through the incorporation process for your business. Our services start at just $375* (Conditions apply, call for details), and this fee includes all government fees. Incorporating your business offers benefits such as limited liability, potential tax advantages, and increased credibility.
  2. CRA Representation: Dealing with the Canada Revenue Agency can be daunting, especially when disputes or penalties are involved. Tax4Less provides professional CRA representation services, ensuring you have a knowledgeable and experienced team to support you during audits, disputes, and negotiations.


Ensuring timely payment of income tax and complying with tax regulations is crucial for the financial well-being of your corporation. Failure to do so can result in penalties and interest charges that can significantly impact your business. When you need expert assistance with tax matters, including CRA representation and incorporation services, Tax4Less is here to help. Our affordable services and experienced team can provide you with the guidance and support you need to navigate the complex world of corporate taxation successfully. Remember, proactive tax compliance and seeking professional assistance when necessary are essential strategies for effectively managing your corporation’s tax responsibilities. [Disclaimer: This article is for informational purposes only and does not constitute tax advice. For personalized advice related to your specific tax situation, please consult a tax professional or the Canada Revenue Agency.] *Price subject to change. Contact Tax4Less for the most up-to-date pricing information.

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