When does the CRA instalment penalty apply in 2026?

CRA applies the instalment penalty only when the actual 2026 instalment interest charge is more than $1,000.

How does CRA calculate the instalment penalty?

CRA subtracts the higher of $1,000 or 25% of the interest that would apply if no instalments were paid from actual instalment interest, then divides the remaining amount by two.

CRA Instalment Interest & Penalty Calculator

Check whether the $1,000 interest threshold is crossed and apply CRA's two-part formula.

01 —CRA INTEREST FIGURES

Use the actual instalment-interest estimate and the interest that would apply if no 2026 instalments had been paid. CRA uses both figures in its penalty formula.

Actual instalment interest

Interest if no instalments were paid

02 —PENALTY RESULT

Estimated instalment penalty

$750

Interest exceeds the $1,000 threshold

Formula deduction

$1,000

Higher of $1,000 or 25% of no-payment interest

Interest + penalty

$3,250

Penalty = (actual instalment interest − the higher of $1,000 or 25% of no-payment interest) ÷ 2. CRA charges the penalty only when actual 2026 instalment interest exceeds $1,000.

CRA — Instalment interest and penalty charges

CRA Instalment Interest & Penalty Calculator

Official source

Related Calculators

Take-home pay

Federal + provincial income tax

CPP & EI premiums

Federal public service pay

All Canadian tax calculators