December 15, 2026: the one instalment you can calculate properly
Four dates carry the instalment year: March 15, June 15, September 15 and December 15. The first three are paid on estimates made with partial information. The December payment is different in kind, not just in sequence. By the time it comes due, eleven and a half months of 2026 income are sitting in your books, so the calculation option that was a gamble in March, the current-year option, is now close to arithmetic. Tax instalments exist to spread out the tax that would otherwise land in one lump sum on April 30 of the following year, paid while the income is being earned, the way an employer deducts tax from each pay period. The December instalment is your last chance to land that spreading close to the real number.
The saving runs in both directions. Pay the reminder amount when your income has fallen and money sits with the CRA for months that could have been working in the business. Pay it when your income has risen and the shortfall accrues interest from each due date, with a penalty waiting if the interest grows large enough. Both errors are avoidable in December, because December is when the estimate stops being an estimate.
Who actually owes this payment
The test has two parts, and both have to be true. Your net tax owing for 2026 must be more than $3,000, and it must also have been more than $3,000 in either 2025 or 2024. For Quebec residents the threshold is $1,800. Net tax owing is what is left after tax already withheld at source, which is why this lands on the self-employed, landlords, investors and anyone else whose income arrives with little or no tax taken off. One group is not working to December 15 at all: farmers and fishers have a single instalment due date, December 31.
The CRA sends instalment reminders, typically in February and August, showing suggested amounts. Treat the August reminder as a starting figure, not an instruction. It was calculated from your latest assessed return, and your latest assessed return knows nothing about how 2026 actually went.
The three options, re-run with December numbers
| Option | What the payments are based on | Best fit, per the CRA |
|---|---|---|
| No-calculation | The latest assessed tax return; the amounts are the ones printed on the CRA instalment reminders | Income, deductions and credits stay about the same from year to year |
| Prior-year | Your 2025 tax return, worked out on the CRA calculation chart for 2026 instalments | 2026 will look like 2025, but significantly different from 2024 |
| Current-year | Your estimated 2026 net tax owing, CPP contributions payable and voluntary EI premiums | 2026 will be significantly different from both 2025 and 2024 |
The decision framework is simple once the year is nearly over. Run all three totals. If 2026 tracked 2025 closely, the prior-year and no-calculation totals will land near each other and either is defensible. If 2026 income moved a lot in either direction, the current-year option is the honest one, and December is the month its main weakness, the guesswork, mostly disappears. One condition travels with the self-calculated options: pay in full by the due dates and the CRA will not charge instalment interest or a penalty, unless the estimated amounts are too low. A low estimate is not a discount. It is interest waiting for a due date.
A worked example, with the assumptions on the table
Suppose the reminders set your 2026 instalments at $3,000 a quarter, $12,000 for the year, and you paid the March, June and September amounts in full: $9,000 already sent. Now suppose your near-final books put 2026 net tax owing at $8,400. Under the current-year option your total required for the year is $8,400, which is less than you have already paid. The December payment the calculation calls for is zero, and the $600 difference is settled when the return is assessed. Sending the reminder's $3,000 anyway would put $3,600 more than the year's tax into the account months early.
Run it the other way. If near-final net tax owing is $14,000, the current-year total is $14,000 and the December payment that completes it is $5,000, not the reminder's $3,000. The extra $2,000 is not a penalty or a top-up fee. It is the tax itself, arriving on the date the system sets for it instead of accruing interest. As an illustration of what delay costs: a $2,000 shortfall carried from September 15 to December 15, 91 days, at an assumed 7 percent annual rate compounded daily, adds roughly $35 of interest. The rate in that example is an assumption for the arithmetic, not a quoted CRA rate: instalment interest is compounded daily at the prescribed rate, and that rate can change every three months.
The December recalculation, step by step
- Gather the year's paper. Both instalment reminders and your own record of what you actually paid on March 15, June 15 and September 15. The recalculation runs on amounts paid, not amounts intended.
- Estimate 2026 net tax owing from near-final numbers. Use the year's income as it stands in mid-December, plus CPP contributions payable and any voluntary EI premiums if you are using the current-year option.
- Compute the year's total under each option. Reminder total, prior-year total from the 2025 return, current-year total from your estimate. The CRA calculation chart for instalment payments for 2026 does the arithmetic for the two self-calculated options.
- Subtract what you have already paid. The remainder is the December payment under that option. If the remainder is zero or negative under the option you are relying on, the December payment is zero.
- Pay the chosen amount by December 15, 2026. Farmers and fishers: your single payment is due December 31 instead. Keep the confirmation with the year's tax file.
- If an earlier quarter came up short, fold the catch-up into this payment. Overpaying an instalment earns credit interest that reduces interest charges on the shortfall. Step 6 of this list is where that rule gets used on purpose.
- Close the loop for next year. If instalments are a recurring pain, December is when to arrange more tax withheld at source instead, which can reduce or eliminate next year's instalments. The routes are named forms: ISP3520OAS for Old Age Security, ISP3520CPP for Canada Pension Plan benefits, and Form TD1 for EI or employer pension benefits, sent to the employer or pension administrator.
What success looks like: the amount you send on December 15 equals a total you calculated for 2026, minus amounts you can show you already paid. Not the reminder's number, not last December's number, and not a round number chosen to feel safe.
Traps and fine print
- The penalty has a trigger, and it is higher than most people expect. An instalment penalty applies only if your instalment interest for 2026 is more than $1,000. Past that point the penalty is half of the amount by which your actual interest exceeds the higher of $1,000 or 25 percent of the interest you would have owed had you paid nothing all year. Small shortfalls cost interest. Large, year-long shortfalls cost interest plus this.
- Credit interest is not a refund. Paying early or overpaying earns instalment credit interest, but the CRA is explicit: it is not refundable, and it can only be used against interest charges on insufficient or late payments for the same tax year. It is a shield for a known shortfall, not a savings account.
- Some income can never carry withholding. Tax cannot be withheld from self-employment, investment or rental income, or capital gains. If that is where your income comes from, instalments are the only spreading mechanism available, which makes the December calculation the whole game.
- A reminder is not a ruling. The CRA's own worked example shows a taxpayer whose estimate falls below the $3,000 threshold disregarding the reminders for that year. The obligation follows the test, not the mail.
When the recalculation is not worth it
If your income is steady, your books are current, and last year's return looks like this year's will, the reminder amount and the recalculated amount will be close, and the honest answer is to pay the reminder and spend the hour on something else. The recalculation earns its time when something changed: a contract gained or lost, a property bought or sold, a first year of self-employment income replacing a salary. It is also not a rescue for books that are months behind. An estimate built on missing records is worse than the reminder, because a too-low self-calculated amount carries interest even when every payment was made on time. In that case, pay the reminder amount in December and reconcile the books in January.
What done looks like on December 16
One payment made, sized by a calculation you can reproduce: the option you chose, the year's total under it, the three payments already made, and the difference. If the difference was zero, the record of the calculation is the deliverable, filed with the reminders. Either way, April 30 stops being a surprise, which was the point of the instalments in the first place.
— Penny Hughes, Money Writer — Saving Desk