I made no instalments payments in 2023 as I thought my net tax owing in 2023 would be below $3000. I received instalment reminders from CRA and I ignored the emails. Now, I believe my net tax will be $3600.I am trying to calculate the instalment interest I will be paying when I file my 2023 T1 (personal tax return). I cannot reduce my taxes as I am over 71 years old and have no RRSP deductions to claim. If the instalment interest is high, I am thinking of opening a spousal RRSP as my spouse is 69 years old. I have no other avenues of reducing my 2023 taxes. Can someone help me in the calculations and determine my instalment interest charge?
1 Answer
After reviewing many CRA websites I believe I have an answer to my own question. For 2023, instalment reminders were all due March, June, Sept and Dec 15. My amounts due were $1000 for both March and June and $1500 for both Sept and Dec. Since I made no instalments in 2023, I will be charged the prescribed CRA interest of 9% up to date of due date of filing the T1 tax return April 30, 2024 or earlier. Calculated as follows: Days from March 15- April 30, 2024: 405 x $1000 x 9% /365= $100 Days from June 15 - April 30, 2024: 315 x $1000 x 9% / 365= $78 Days from Sept 15- April 30, 2024: 225 x $1500 x 9% / 365= $83 Days from Dec 15 - April 30, 2024: 135 x $1500 x 9% / 365= $50 So, the instalment interest charge will be approximately $100+78+83+50= $311*
- the $311 will be lower if I file my T1 return earlier than April 30, 2024