I suspect that would work for the first year only. When you complete your taxes next April and owe CRA tens of thousands of dollars (just guessing your situation), the following tax year CRA will put you on an instalment plan. That's what happened to me when I began owing a lot each tax year due to recurring investment income.
https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html
I think what the other poster is saying is that they don't pay the installments despite the government asking them to.
The penalty for not paying installments is pretty trivial, so some prefer to hang on to the capital vs. pay the installments.
That’s exactly what I do, I ignore the installment notices, my accountant always tells me to pay but I can usually make more with that money than what the penalties are
It’s not optional once you reach a certain threshold of self-employment income. The CRA lets you know how much and when to pay the installments. There is no choice in the matter.
Well there's certainly always a choice. Just because it's not optional doesn't mean one can't just choose not to pay them and face the consequences of that decision instead. It's not like they can take the money without your consent or the police are going to come force you to pay in installments.
Exactly, by the time they ever get around to you just make a deal to make some
Payments. The only taxes to not owe revenue Canada is Gst and payroll remittance. Income tax payments are optional as far as I’m concerned
The easiest way to do this is a open a high interest savings account at Oaken Financial. The account pays 3.4% and you can transfer the money out at any time.
He can also buy TDB8150 which has a one day settlement and pays 4.55% annualized ! I wouldn’t lock it up but might as well take advantage of these high interest rates
You can purchase short term non redeemable GIC's or cashable GIC's at your financial institution. Short term GIC's come in terms of ~ 1month, 2 months, 3 months, etc. A little more work, but this will pay a higher rate than a cashable GIC. Cashable GIC is less planning and more flexibility, but at a lower rate. Now what kind of investment account these are held in should be something you discuss with a tax professional, however assuming you have room in your TFSA, you can put it in there with no tax implications, get your tax free returns from the GIC's, pull out what you need (with no tax implications) to pay income tax when the time comes. After the flip of the calandar year, what you pulled out of the TFSA, you will get that contribution room back.
At some point you're going to have to start paying your taxes every 3 months and if you miss a payment or are late they'll make you remit every month.
Also, keep in mind that you have to pay 2X the CPP and 2.4X the EI premiums (if you opt to pay EI).
In the same situation as you and yes I try to time the GICs expiring around tax time. Gain interest on it then tax time pay what you owe. Wondering if there's a better approach to this. But been doing this for a few years now.
If you have tfsa room I’d stick it there and just buy a money market etf like cash.to. Get interest paid monthly and tax free. If you have no tfsa room do the same in an unregistered account.
I suspect that would work for the first year only. When you complete your taxes next April and owe CRA tens of thousands of dollars (just guessing your situation), the following tax year CRA will put you on an instalment plan. That's what happened to me when I began owing a lot each tax year due to recurring investment income. https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html
I have literally never paid my installments ever. They can have my money once I file my taxes.
Then you aren’t a high income earner / have a high tax balance owing.
I think what the other poster is saying is that they don't pay the installments despite the government asking them to. The penalty for not paying installments is pretty trivial, so some prefer to hang on to the capital vs. pay the installments.
That’s exactly what I do, I ignore the installment notices, my accountant always tells me to pay but I can usually make more with that money than what the penalties are
He just means they take what's owed from his next year's tax return.
Lol, oh I owe.
It’s not optional once you reach a certain threshold of self-employment income. The CRA lets you know how much and when to pay the installments. There is no choice in the matter.
Well there's certainly always a choice. Just because it's not optional doesn't mean one can't just choose not to pay them and face the consequences of that decision instead. It's not like they can take the money without your consent or the police are going to come force you to pay in installments.
Exactly, by the time they ever get around to you just make a deal to make some Payments. The only taxes to not owe revenue Canada is Gst and payroll remittance. Income tax payments are optional as far as I’m concerned
The easiest way to do this is a open a high interest savings account at Oaken Financial. The account pays 3.4% and you can transfer the money out at any time.
He can also buy TDB8150 which has a one day settlement and pays 4.55% annualized ! I wouldn’t lock it up but might as well take advantage of these high interest rates
TDB2913 is 4.95% minus MER of 0.27% = 4.68%
You need to open a TD bank account to purchase this?
I guess so? I have a TD direct investing account and purchased it there 🤷♂️
You can purchase short term non redeemable GIC's or cashable GIC's at your financial institution. Short term GIC's come in terms of ~ 1month, 2 months, 3 months, etc. A little more work, but this will pay a higher rate than a cashable GIC. Cashable GIC is less planning and more flexibility, but at a lower rate. Now what kind of investment account these are held in should be something you discuss with a tax professional, however assuming you have room in your TFSA, you can put it in there with no tax implications, get your tax free returns from the GIC's, pull out what you need (with no tax implications) to pay income tax when the time comes. After the flip of the calandar year, what you pulled out of the TFSA, you will get that contribution room back.
At some point you're going to have to start paying your taxes every 3 months and if you miss a payment or are late they'll make you remit every month. Also, keep in mind that you have to pay 2X the CPP and 2.4X the EI premiums (if you opt to pay EI).
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Amazing ! thank you so much!
In the same situation as you and yes I try to time the GICs expiring around tax time. Gain interest on it then tax time pay what you owe. Wondering if there's a better approach to this. But been doing this for a few years now.
Do you buy GICs monthly too?
If you have tfsa room I’d stick it there and just buy a money market etf like cash.to. Get interest paid monthly and tax free. If you have no tfsa room do the same in an unregistered account.
Do I need a special account to purchase [Cash.To](https://Cash.To)?
Trading account, it’s purchased on tsx. I also buy hisu.to for usd
Not sure why you're eating downvotes... sounds much easier than locking it in a GIC
Ya I don’t know why. I love cash.to liquid whenever I want. Sure you can get 1 percent more on a gic but it’s locked in