# Estimated taxes question



## brad (May 22, 2009)

Due to my somewhat complicated work situation (I'm the sole employee in Québec of a US-based company that happens to also have an office in Toronto), the income taxes that are withheld from my paycheque are paid to Ontario and then every year a transfer is made between Ontario and Québec. Because Québec's taxes are higher, I always have to pay some extra, and my accountant set up a quarterly estimated tax schedule for me, which I follow.

However, this quarterly schedule isn't officially recognized by the Québec Revenue Agency, in the sense that they don't send me the usual forms and schedule to fill out. Instead I just send them a cheque every quarter with a letter explaining that it should be applied to my income taxes for the year.

My upcoming September 15 payment will cause cash-flow problems for me due to some unanticipated expenses that came up last month, and I'm wondering if sending that payment two weeks late is likely to result in penalties. I think it would if I were on an official instalment schedule, but because I've never received any forms or a payment schedule from Québec my hunch is that a late payment would be okay.

Thoughts?


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## CanadianCapitalist (Mar 31, 2009)

brad said:


> My upcoming September 15 payment will cause cash-flow problems for me due to some unanticipated expenses that came up last month, and I'm wondering if sending that payment two weeks late is likely to result in penalties. I think it would if I were on an official instalment schedule, but because I've never received any forms or a payment schedule from Québec my hunch is that a late payment would be okay.
> 
> Thoughts?


Even if you are considered late for two weeks, would it matter if you are charged interest? Let's say your total annual installment is $10,000. If you are late paying $2,500, a 10% interest over two weeks would only be $10.


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## MoneyGal (Apr 24, 2009)

It's 5%.


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## brad (May 22, 2009)

Well, 5% for CRA, not sure if those penalties are harmonized across the provinces, but in any event you're both right, it's not worth worrying about. That'll help me breathe (and eat!) easier in September.

Thanks...


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## humble_pie (Jun 7, 2009)

brad if you knew how i pay my installs ... pretty slapdash ... recently paid the june install. May or may not make september.

the thing is i usually manage to do a rough calc at end of yr & then i overpay slightly. Six or 7 months later comes the refund. I don't know whether quebec assesses int owed from late quarters less overpaid final installment or whether they're just happy to see me. But i've never been assessed interest.

(signed) mae west


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## brad (May 22, 2009)

humble_pie said:


> brad if you knew how i pay my installs ... pretty slapdash ... recently paid the june install. May or may not make september.


Thank you -- that is exactly what I was hoping to hear! I do have an emergency fund for these kinds of things but prefer to use it only for real emergencies -- this is clearly not one of them. I've never missed a payment deadline for anything in my life, so this is new territory for me and I wasn't sure how strict they might be.


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## balexis (Apr 4, 2009)

If Revenu Quebec never required you to pay installments, why do you do so? 

I would just stash away the money, cash in the interests and wait for my Notice of Assesment and then write a cheque for the right amount.

They will require installments under certain conditions, and they will make sure to tell you when you are obliged to do so:
http://www.revenu.gouv.qc.ca/en/citoyen/impots/rens_comp/acomptes/default.aspx

Unless of course you may be tempted to spend the money along the way, this solution makes it way simpler, plus you get some interest on the money you owe to the gov


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## brad (May 22, 2009)

balexis said:


> If Revenu Quebec never required you to pay installments, why do you do so?


Because my accountant told me to  Every year when she gives me my tax returns she always includes a schedule for paying tax instalments to Quebec. But that schedule is drawn up by her; I'm not sure if she shares it with Revenu Quebec and in any case they don't send me their own schedule.

You're right, I probably should stash the money away and pay it all at once at tax time, earning interest on it in the meantime. I did do it that way when I first moved here, and that triggered Revenu Quebec to begin requiring me to pay quarterly instalments. But then one year I overpaid and got a big refund; they stopped sending me payment schedules after that. I'll check with my accountant to see what she advises.


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## humble_pie (Jun 7, 2009)

here's like a real dumb simple idea. Why not ask revenu Q to send quarterly forms for instalment payments directly to you. It's true that there's an intermediary, which is the toronto employer. But you could go & see rev Q to straighten this out. They're pleasant & helpful.

the valuable thing about the quarterly forms is, they tell you how much to pay. Based on last year's tax return. Mine always have amounts that are totally reasonable. Plus the forms state even if you wind up owing more tax, there won't be any penalty or interest if you've paid these quarterly assessments.

best of all are the years following low income years. Then the forms state that "you have nothing to pay."


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## brad (May 22, 2009)

humble_pie said:


> the valuable thing about the quarterly forms is, they tell you how much to pay. Based on last year's tax return. Mine always have amounts that are totally reasonable.


My accountant does tell me how much to pay for each instalment based on the taxes I paid last year; in effect it's like getting the forms from Revenu Québec; the only difference is that I don't have a form to submit. I'm on a salary so my income doesn't change much from year to year; it's pretty predictable, as is the amount I'm going to owe to Québec.

We tried to have my income taxes withheld and paid directly to Québec instead of Ontario but it's too complicated -- my company understandably doesn't want to set up shop here and file all the paperwork to become an official employer in Québec when they only have one employee (out of about 3,500 worldwide) here. So I am officially employed by our Toronto office as a field employee, which is why my income taxes are withheld to Ontario.

I guess the extra I have to pay each year is small enough (less than $10K total) that Revenu Québec stopped sending me the instalment forms.


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