Do you know exactly what provisional instalments are? These are partial tax payments that most businesses must pay in monthly or quarterly payments.
It should be noted that the Income Tax Act requires companies to pay such instalments so that they are not favoured over other taxpayers whose taxes are withheld at the source.
Find out which businesses are required to pay the GST and QST by provisional instalments, as well as when and how they must do so.
Which businesses must pay the GST and the QST by provisional instalments?
Not all companies are required to pay their taxes by provisional instalments. It is important to become familiar with the various taxation rules to understand the obligations that your company must meet.
The companies affected by instalment payments are those whose total tax and capital tax to be paid each exceeds $3,000. This is without taking into account the countervailing tax of financial institutions.
Corporations with a tax balance of less than $3,000 at the federal level and $3,000 at the provincial level for the previous or current year are not affected by provisional instalment tax payments. The same goes for companies that have just incorporated or are in their first year of operation.
When is it necessary to pay taxes by provisional instalments?
Concerning the GST and QST, businesses eligible for instalment payments must make four instalments a year if their reporting period is annual, and twelve instalments if it is monthly.
According to the Canada Revenue Agency, "provisional instalments are due on the last day of each full month of your tax year or each full quarter for qualifying corporations." Business taxation in Quebec is very complex. When you set the amount to be paid in instalments, it is best to get help from a corporate tax specialist.
How do you pay your company taxes by provisional instalments?
There are three payment methods for settling provisional instalments.
Companies can make payments over the internet via a financial institution’s online payment service. If you make a separate statement for the GST and the QST, you will have to use the code on the payment slip.
Pay your instalments in person
You can also visit a teller at a financial institution to pay your taxes directly.
Payment by mail
Finally, you can pay instalments by mail by returning the payment slip and the GST/HST and QST instalment payment form that can be found online.
Provisional instalment payments: hire an accountant or tax specialist
In Quebec, many companies must pay GST and QST by instalments. These companies usually hire a corporate tax specialist to calculate the down payment and pay it on time. They must comply with this practice four to twelve times a year, which requires great discipline and organization.
If you are looking for an accountant or tax advisor that specializes in corporate taxes to help you pay installments, do not hesitate to contact us.