Canada proposes higher income-tax instalment thresholds from 2028

Thresholds would rise from 2028

The measures are proposals in the Budget and accompanying Notice of Ways and Means Motion, not enacted changes. For individuals resident outside Quebec, the instalment threshold would rise from C$3,000 to C$7,500. For Quebec residents, it would rise from C$1,800 to C$4,500. The corporate threshold would rise from C$3,000 to C$7,500. The new amounts would be indexed to inflation after 2028 and rounded to the nearest C$500.^[2][3][4][5]

The look-back test remains

For individuals, the higher threshold would not remove the existing year-by-year test. Instalments would generally not be required where net tax owing is at or below the applicable threshold for the current year or either of the two preceding years. Corporations generally make monthly or quarterly federal instalments unless federal tax payable is at or below the statutory threshold for the current or preceding year. Any remaining tax would continue to be due on the ordinary balance-due date.^[2][3][4][5]

Annual payment for business-income individuals

A separate proposal would let an individual whose primary source of income is a business, including professional or commission income, make one instalment equal to two-thirds of combined federal and provincial net tax owing by 31 December. The balance would remain due on the ordinary balance-due date. This would extend the existing annual-payment approach for farming and fishing income to other business income.^[2][3][4]

Proposal-stage controls

Both changes would apply to taxation years beginning on or after 1 January 2028. Late or insufficient instalments can attract interest and penalties under the current rules, so taxpayers should not apply the proposed amounts before enactment. Groups should model the cash-flow effect for Canadian corporations and business owners, preserve the separate Quebec threshold and look-back logic, and change payment calendars only after final legislation is verified.^[2][3][4][5]

The instalment proposal is one focused component of Budget 2026. It does not complete review of the Budget’s wider corporate, international and compliance package, and it does not itself alter a tax return form or the ordinary balance-due date.^[2][3]