Cash Flow Plan: September 15 Instalment Can Be Avoided

Not only do tax season blues manifest themselves into very costly gaffes at tax filing time, prepaying too much tax quarterly, too, takes a toll on cash flow and on your investment strategy, too:  Nothing worse than having to take the money out of the marketplace at exactly the wrong time, for no reason.

It appears, though, that neither extreme volatility in the marketplace, warnings of imminent recessions and a debt-laden households can stop this wealth eroding phenomenon:  every year millions of Canadians pay too much in taxes.  They fail to file tax returns, they pay late filing penalties, they miss using all the deductions and credits that are available to them.  And the next time this happens is just around the corner:  September 15, when the third quarterly tax instalment is due.
Good news:  If you made quarterly instalment payments over the past couple of years, and you expect your income will drop again this year, do know that you can switch from the “billing method” CRA uses to remind you to send money, to the optional instalment calculations using either a prior year or current year estimate.   Make sure you see your tax or financial advisor about this and let them do what you are paying them for:  advise you on the correct amount of taxes owing next month.  This could really enhance your winter vacation planning  if you find you don’t owe a December 15 instalment either.

Remember too that missed deductions can reduce lucrative Child Tax Benefits, or cause a clawback of Old Age Security payments.  You’ll need to save receipts now to enable a better result.  Another lost opportunity arises when you miss making RRSP contributions that could in fact, increase both those amounts—which could turn into much needed monthly cash flow when income from investments or jobs are at risk.

It’s Your Money.  Your Life.  Remember, you are required to arrange your affairs within the framework of the law to pay the least amount of taxes possible.  You are not required to overpay your taxes.  In these difficult financial times, you’ll want to pay yourself first.

Evelyn Jacks, is the author of 46 best-selling books on the subject of personal income taxation, including her latest, Essential Tax Facts, and the President of the Knowledge Bureau, focused on excellence in financial education. For more information call toll free 1-866-953-4769 or visit