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<blockquote><p><strong>Proposed, not law yet.</strong> Budget 2026, tabled on 5 November 2026, proposes to raise the tax instalment threshold from $3,000 to $7,500 ($1,800 to $4,500 in Quebec) and to allow one annual instalment for people with business income. Both would start with taxation years that begin on or after January 1, 2028. Nothing changes for 2026 or 2027.</p></blockquote><p>Instalments are advance payments of income tax during the year. Fewer people would need to make them under the proposal, and some business owners could pay once a year.</p>
What are tax instalments?
The budget text explains it this way. Most individuals pay tax through withholdings on employment income that employers remit to the CRA. When someone receives income that is not subject to withholding, such as certain pension income, business income, dividends, interest, rental income and capital gains, they may have to pay income tax in quarterly instalments.
For most individuals, instalments are required if the combined federal-provincial net tax owing on that kind of income, for the current year and either of the two previous years, is more than $3,000. For Quebec residents the figure is $1,800 of federal net tax owing, lower because the federal government does not collect provincial income tax in Quebec. Corporations generally pay monthly or quarterly unless their total federal tax payable is $3,000 or less for the current or the previous year. Interest and penalties may apply on late or insufficient instalments. More detail is in Tax Instalments for Individuals in Canada: Who Pays and When.
What does Budget 2026 propose for the threshold?
Budget 2026 proposes to increase the threshold from $3,000 to $7,500 for corporations and for individuals resident outside Quebec. For individuals resident in Quebec it would go from $1,800 to $4,500. The thresholds would be indexed to inflation and rounded to the nearest $500. Any remaining tax payable for a year would be due on the applicable balance-due date.
The measure would apply to taxation years that begin on or after January 1, 2028. The look-back would stay as it is: the relevant threshold has to be exceeded for the current year and either of the two previous years. The budget gives this example. An individual resident in Manitoba would be required to make instalments for 2028 if their 2028 net tax owing exceeds $7,500 and either their 2026 or 2027 net tax owing exceeds $7,500.
What does that look like with round numbers?
Take a landlord outside Quebec who owes $5,000 of net tax on rental income for 2028. At the proposed threshold of $7,500, that amount does not exceed the line, so no instalments would be required for 2028 and the $5,000 would be due on the balance-due date. Under today's $3,000 threshold, the same $5,000 could trigger instalments if a prior year was also above it.
Now take a self-employed consultant expecting $9,000 of net tax owing for 2028. If the budget's own Manitoba-style test is met, meaning 2028 exceeds $7,500 and either 2026 or 2027 did too, instalments would still be required. The higher line removes people in the band between $3,000 and $7,500 from the requirement, and leaves those above it where they are.
The budget text does not spell out how the early years would be tested beyond that example, so wait for the draft legislation before you rely on a specific year.
What is the annual instalment for business income?
Today, the budget text says, individuals whose chief source of income is fishing or farming can make a single instalment payment of two thirds of their net tax owing by December 31, and pay the remainder by the balance-due date in the following year. Budget 2026 proposes to extend similar treatment to individuals whose primary source of income is a business, including professional or commission income. They could make a single annual instalment instead of quarterly ones. The payment would equal two thirds of their combined federal-provincial net tax owing for the year and be due by December 31, with the remainder due on the applicable balance-due date. It would apply to the 2028 and later taxation years.
Example with round numbers: a consultant expects $9,000 of net tax owing for 2028. Choosing the single option, they would pay $6,000 by December 31, 2028 and the remaining $3,000 on the balance-due date. Under the separate May 15 proposal, that date would be May 15, 2029, if that proposal also becomes law.
What should you do now?
For 2026 and 2027, follow the current rules. If you owe more than $3,000 in tax on income without withholding for the current year and either of the two previous years, instalments are required now. The quarterly calculator linked below lets you test your own numbers against today's threshold.
For planning, a business owner could compare quarterly cash flow with a single December payment of two thirds. The budget text does not say how a person would choose the single option, so wait for CRA guidance. Self-employed readers will also find the basics in How Income Tax for Self Employed People Works in Canada.
What is still uncertain?
The measures are proposals and need legislation. The text does not say how a person would elect the annual instalment, how the CRA would show it on instalment reminders, or what the first indexed figure would be. Interest and penalties may apply on late or insufficient instalments under the rules as they stand, and the budget does not describe a change to them.
The facts here come from the Budget 2026 tax annex named in the sources, tabled on 5 November 2026 and read on 9 November 2026. This is an independent information site. It provides no services, does not represent the CRA, the Department of Finance or any organization, and collects information from open sources. It does not guarantee that anything here is accurate or current, and it accepts no liability for how you use it. Every measure described is a proposal and can change before it becomes law. Check the official budget page before you rely on it.
Frequently asked questions
What is the proposed new instalment threshold?
Budget 2026 proposes $7,500 for corporations and individuals outside Quebec, and $4,500 for individuals in Quebec, indexed to inflation and rounded to the nearest $500, from taxation years beginning on or after January 1, 2028.
Does this change what I pay for 2026 or 2027?
No. The proposed measures start with taxation years that begin on or after January 1, 2028. Current rules apply until then.
What is the single annual instalment?
For individuals whose primary source of income is a business, the budget proposes one payment of two thirds of combined federal-provincial net tax owing, due December 31, with the rest due on the balance-due date. It would apply from 2028.
Who can use the single instalment today?
According to the budget text, individuals whose chief source of income is fishing or farming. Budget 2026 proposes to extend similar treatment to other business income.
Do interest and penalties still apply?
The budget text says interest and penalties may apply on late or insufficient instalment payments. It does not describe a change to that.