Corporate tax instalments

Buyers meet instalments when they take over a company that has been paying tax in advance. Subsection 157(1) lets the corporation choose one of three methods: monthly amounts based on an estimate of the year’s tax, on its first instalment base, or on its second and first instalment bases together. Subsection 157(1.1) lets a small-CCPC, as defined in subsection 157(1.2), pay quarterly instead, and subsection 157(2.1) lets a corporation whose tax or first instalment base is at or below a stated amount pay the whole by the balance-due day. The CRA says corporations calculate and remit their own instalments and that it does not send reminder notices for them.

Situations that change them

The CRA’s instalment guide says a new corporation need not pay until it has started its second year, and that no instalment is due for a tax year that is shorter than a stated minimum (see short taxation year). When a corporation is formed by amalgamation, it is treated as a continuation of its predecessors, and its instalment base is generally the total of theirs. The guide also says the Act authorizes the CRA to charge instalment interest and penalty, and arrears interest, if it does not get the required payments on time.

What to ask

• Who prepares the instalment schedule and which basis the company uses
• Whether instalments are current, and the CRA account balances
• Who will make the payments that fall due after closing

See how to check for CRA debts before buying.