HST Quarterly instalments

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Anonymous Posted 1 day ago MadanCA Team edited answer 10 hours ago

Hi Allan team,

I have a small corporation. I paid the business GST/HST first three instalments for current year based on previous year HST net tax, do I still require to pay the final 4th quarter instalment even I have overpaid for current year (less sales in current year)? Will CRA charge interest if I don’t pay the 4th quarter instalment even I have overpaid for current year? Can I change from one method (base on previous year) to another (base on actual current year).
Thanks
Anthony

1 Answer

score 0 · Answer 1 · 2026-01-28T20:14:35+00:00

Hi Anthony,

Good questions. This situation is very common when sales drop during the year.

1. Do you still need to pay the 4th instalment if you’ve already overpaid?
No. If your actual HST net tax for the year will be less than the instalments already paid, you do not need to pay the 4th instalment.

CRA ultimately looks at total instalments paid vs. actual net tax for the year, not whether every instalment was paid mechanically.

2. Will CRA charge interest if you skip the 4th instalment?
Generally no, provided that:

Your total instalments paid are equal to or greater than your actual net tax for the year, and
Any remaining balance (if applicable) is paid by the HST return filing due date.

If you have genuinely overpaid due to lower current-year sales, there should be no instalment interest or penalties.

However, if CRA later determines that you underpaid overall, instalment interest can apply retroactively.

3. Can you switch instalment methods mid-year?
Yes. CRA allows three methods:

Based on prior-year net tax
Based on estimated current-year net tax
No-instalment method (pay the balance when filing)

You are not locked into one method. If current-year sales are lower, you can switch to the current-year estimate method and reduce or eliminate remaining instalments.

Just keep in mind: if your estimate is too low and results in underpayment, CRA may charge interest.

Practical tip:
If you are confident that:

Current-year net tax is lower, and
Instalments already paid exceed that amount

then skipping the 4th instalment is reasonable and commonly done.
If the numbers are close or uncertain, paying a small top-up can reduce interest risk.

HST Quarterly instalments

1 Answer

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