GST/HST instalments: the quarterly payments annual filers forget about

The trap in annual filing

Filing GST/HST once a year sounds simpler than quarterly or monthly filing, and for record-keeping it often is. But annual filing comes with a catch that surprises a lot of owners: if you owe enough, CRA doesn’t actually wait a full year for its money. It expects quarterly instalments throughout the year, with the annual return simply reconciling what you’ve already paid against what you actually owe.

The $3,000 trigger

The rule is tied to your net tax — roughly, the GST/HST you collected minus the input tax credits you claimed. If your net tax for the previous fiscal year was $3,000 or more, you’re required to make quarterly instalment payments in the current fiscal year. If your business has branches or divisions that file separately, the $3,000 threshold applies to the total for the whole business, not each division. Monthly and quarterly filers don’t deal with instalments at all — this is specifically an annual-filer issue.

How much, and when

You have two ways to calculate each instalment. The simplest is to pay one-quarter of your prior year’s net tax. Alternatively, if you expect this year to be lower, you can base instalments on one-quarter of a reasonable estimate of your current-year net tax — but if you estimate too low, interest applies on the shortfall, so the estimate route carries risk.

The instalments are due one month after each fiscal quarter. For the common December 31 fiscal year-end, that means:

Any remaining balance is then paid when you file your annual return, which for most annual filers is three months after the fiscal year-end.

What happens if you skip them

Instalments aren’t optional once you’re over the threshold. If you don’t pay them, or you underpay, CRA charges instalment interest on the difference between what you should have paid and what you did — and that interest applies even if you pay your entire GST/HST balance on time when you file. In other words, paying the full amount at year-end doesn’t undo the fact that CRA expected quarterly payments along the way. In some cases an instalment penalty can apply on top of the interest when the shortfall is large.

This lands hardest on businesses with a short earning season, since the instalments fall due in months with little revenue behind them. The guide to managing cash flow in a seasonal business covers reserving for it.

How to stay ahead of it

The cleanest approach is to treat GST/HST like a bill that comes due four times a year, not once. Set aside the tax you collect as you go — ideally in a separate account — and make the quarterly instalment from that reserve. CRA will usually send instalment reminders once you cross the threshold, but the obligation exists whether or not a reminder arrives, so it’s worth knowing your own numbers. If your business is growing and this is the first year you’ve crossed $3,000 in net tax, it’s a good moment to check with your accountant about whether annual filing still makes sense, or whether a different GST/HST filing setup would smooth your cash flow.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.

If the annual reconciliation produces a balance you cannot cover, CRA payment arrangements covers what to do before the interest builds.

Your instalment obligation follows your filing frequency — see how that frequency is determined.