What happens if I skip a payment or pay less than the notice says?

Instalment interest starts accruing from the due date of the payment you missed, and it is not deductible. Federally, if that interest adds up to more than 1,000 dollars for the year, an instalment penalty is charged on top of the interest. Revenu Québec also charges interest on a late or insufficient payment. The key point works in your favour too: if you pay exactly the amounts shown on the CRA notices, on the due dates, you are protected from instalment interest even if your final tax turns out higher than expected.

Do I have to tell the CRA which calculation method I used?

No. You do not need to notify the CRA of the option you choose, and you are not required to pay the amount printed on the reminder. You can pick the method that best reflects your current year. The trade-off is real: only the no-calculation option, meaning the amounts the CRA proposes, shelters you from instalment interest. If you estimate your own current year and estimate too low, interest applies on the shortfall. On the Quebec side, form TP-1026 is what you use to run that calculation yourself.

Do I have to pay my income tax by instalments?

The myth: one bill, once a year

It is what most people assume when they leave a salaried job to work for themselves. As an employee, tax came off every paycheque without you thinking about it. On your own, nobody withholds it. That does not mean the CRA and Revenu Québec wait until spring. Past a certain threshold, they expect to be paid during the year, in four payments.

The rule that triggers instalments

The trigger is not an income figure, it is an amount of net tax owing, and the test looks at two years at once.

Federally, you generally have to pay by instalments if your net tax owing is more than $3,000 in the current year and in either of the two previous years. If you lived in Quebec on December 31, that federal threshold drops to $1,800, because part of your tax is already paid to Quebec.
With Revenu Québec, the obligation applies if your net tax owing is more than $1,800 in the current year and in either of the two previous years.

The practical consequence for a Quebec resident: two systems, two thresholds, two sets of payments. A single cheque to the CRA does not settle the provincial side.

The four dates

March 15, June 15, September 15, and December 15, on both sides. If a date falls on a Saturday, a Sunday, or a public holiday, you have until the next business day. The next payment in 2026 is September 15.

The amount on the notice is not mandatory

Here is the part almost nobody knows. The CRA sends a reminder with an amount printed on it, and Revenu Québec sends form TPZ-1026.A in February and August with its own. Those amounts are calculated from returns already assessed, which means from the past. They are not a bill.

Three methods exist federally, and you choose:

No calculation: you pay the amounts on the reminder. This is the only option that protects you from instalment interest, even if your final tax comes in higher than expected.
Prior year: payments are based on last year's net tax owing. Useful when last year was lighter than the year before it.
Current year: payments are based on your own estimate of this year. This is the option that keeps the most cash in your account when income drops, and the one that costs interest if you estimate too low.

You do not have to tell the CRA which one you are using. In Quebec, form TP-1026 exists for exactly this.

What this means for you in 2026

If your business slowed down this year, paying the reminder amount without looking is lending money to the government until spring. If it sped up, following the notice blindly sets up an unpleasant balance in April. The right method depends on current numbers, and current numbers are exactly what books kept through the year give you. That is the kind of calculation we run for our clients before each date, rather than after the year is over.