Orillia Simcoe Bookkeeping Services
1-888-801-0818 [email protected]
Instalments What are they? Why do I owe them?
INCOME TAX both personal and business is the same. However the government will have to give you instalment notice. Although you can only file yearly you can track your income and adjust their instalments accordingly So if you owed 3,000 in personal income tax in year 1 but it jumps to 8,000 in year two you will need to make 4 x $2,000 QUARTERLY instalments in year three. They reconcile the instalments at year end. So for example if you file a tax OWING of $8000.00 they expect you would have made instalment payment on the 8,000.00. If however you only make 2,000 they expect no instalments would have been made. Those that short pay can expect penalties and interest.
MY TAKE AWAY
It is good practice to keep your books your to date . You should know monthly or quarterly what you financial position is. If you have debts such as tax owing you should know about it. You should know if you made or lost money. So under that umbrella these instalments might make you keep up your records up to date and not wait for the year end surprise