7

I had a tax installment of $7956.00 due on March 15th which I missed and paid on April 30th. I can make an extra installment now to cover the penalty, but I don't know how much it should be.

The rules are here, but I find them confusing: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/ntrst-eng.html

3

The interest rate on overdue income taxes is 5%.

You were approximately six weeks late paying your tax installment. By my calculations, that means you will owe an additional $45.90 in interest charges. That's using the following math: 0.05 * 7956 / 52 * 6

It's possible that interest is calculated from the beginning of the year rather than the due date of your tax installment, in which case your interest would be approximately $132.60. I realise this is all somewhat less than helpful. However, I do not believe the Interest and Penalty Charges document you link to actually imply that you'll be paying a penalty. The interest on your tax installment is not going to be $1000 as far as I can see, and that document states:

We apply this penalty only if your instalment interest charges for 2013 are more than $1,000

(emphasis mine).

Please do not trust the advice given here, though. I'm not a tax lawyer, and, like you, find the information confusing. I would strongly recommend you call the CRA and speak to someone there. I did so earlier this year when I screwed up my tax return. The representative was polite, helpful, and informative. Not at all what I expected.

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    It was my first installment for 2013, so it wouldn't be back dated to 2012. – FigBug May 1 '13 at 14:48
  • Ah, of course. Thanks for clarifying. I'll make an edit to my answer. – ChrisInEdmonton May 1 '13 at 14:53

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