A tax instalment is a periodic prepayment of income tax made through the year, required when you owe more than a set threshold, rather than paying the whole amount at filing.
The CRA requires many taxpayers to pay tax as they earn it rather than in one lump at year-end. Corporations that owed more than $3,000 of tax in the current or a prior year generally pay monthly (or quarterly for eligible small CCPCs) instalments. Individuals face quarterly instalments when net tax owing exceeds $3,000 in the current and either of the two prior years.
Instalments are not an extra tax, just prepayment of tax you already owe, but missing them triggers instalment interest and possibly a penalty. The CRA issues instalment reminders based on prior years; paying those amounts (the "no-calculation option") is the simplest way to avoid interest.
Your corporation owed $12,000 last year. Rather than paying it all at filing, the CRA expects roughly $1,000 monthly instalments through the year, with any balance settled two or three months after year-end.
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