Over 69% Say Yes – Raise the $3000 Instalment Payment Threshold

Should the threshold for making quarterly tax instalments be raised above $3000? Why or why not?

Close to 150 people have already weighed in on the matter and the majority think the government should let people pay their taxes only on the balance due date – April 30 for individuals and June 15 for unincorporated taxpayers. In fact, there were clear reasons why business people should not pay by instalments quarterly.

Kelly had a resounding yes and some good points: “As long as you pay the taxes you owe on time there should be no mandatory installments, only optional. Most of us would put money aside on our own terms so that the money is there when it comes time to pay our taxes. I don’t believe in paying the government until I have to. Some are arguing because they pay on a monthly (or bi-weekly) basis as an employee, then the self-employed should pay installments. Most self-employed have to spend their own money to make money and then don’t get paid for 2 to 3 months for services rendered. As an employee you are getting paid every 2 weeks."

Jo agrees: “Just because a taxpayer has to pay installments does not mean he/she has actually received that money in the current tax year; it just means that CRA has calculated that – based on two years’ prior tax returns – the taxpayer will owe more than $3,000 when the tax return for that year is filed. So the comparison with the employee whose employer makes regular deductions in not altogether valid."

Ken disagrees: "I think one must look towards the average individual and determine what their cash flow would look like. I would hazard a guess, having a tax bill in excess of $3K in April would not be very appetizing, nor friendly to their cash flow. This is a method of increasing one's debt with help from CRA. If you are self employed, quarterly installments based on income put you on a level playing field with employees. Remember employees do not have the luxury of when they pay their taxes. So Cowboy Up, pay your tax liability like everybody else, and move on."

Bev has some comments about the threshold itself: “There should be a much higher limit or no installments whatsoever, however (I am) doubtful CRA will trash installments so there should also be interest paid on the installment equivalent to bank savings rates. I actually would propose that unless the taxpayer has been consistently over $7500 per year and also late in making remittances, instalments should not be required.“

Susan believes the threshold should be even higher. “I believe the threshold should be amounts outstanding over $10,000. Amounts outstanding under that amount that are not paid out in full by April 30, 2014 should be and will be penalized for late payment and interest charged.”

Thanks for your thoughts! This month’s poll question asks: Should Canada’s richest retirees pay more tax on their income during their lifetimes or on their unspent wealth at death? Why?