VIPSolutionsFor the 2023 taxation year, Mr. Mason Boardman has combined federal and provincial/territorial income tax payable of $62,350. The employer withheld $61,600. For 2024, his combined federal and provincial/territorial income tax payable is $29,760. The employer withheld $13,740. In 2025, he anticipates having combined federal and provincial/territorial income tax payable of $52,370. Employer withholdings are expected to be $47,390. In January, 2025, you are asked to provide income tax advice to Mr. Boardman. He has asked you whether it will be necessary for him to make instalments payments in 2025 and, if so, what the minimum amount should be and the dates the amounts are due. Required: Provide the information requested by Mr. Boardman. Show all your calculations. i need step by step solution
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For the 2023 taxation year, Mr. Mason Boardman has combined federal and provincial/territorial income tax payable of $62,350. The employer withheld $61,600. For 2024, his combined federal and provincial/territorial income tax payable is $29,760. The employer withheld $13,740. In 2025, he anticipates having combined federal and provincial/territorial income tax payable of $52,370. Employer withholdings are expected to be $47,390. In January, 2025, you are asked to provide income tax advice to Mr. Boardman. He has asked you whether it will be necessary for him to make instalments payments in 2025 and, if so, what the minimum amount should be and the dates the amounts are due. Required: Provide the information requested by Mr. Boardman. Show all your calculations. i need step by step solution
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Asked by: Rohit Vaghela
Created at: 2026-02-04 11:11:21
Asked by: Rohit Vaghela
Created at: 2026-02-04 11:11:21
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# Instalment Requirements for Mr. Boardman – 2025
## 1. **Background: Instalment Payment Rules**
Individuals may need to pay income tax by instalments if their **net tax owing** (federal + provincial/territorial, minus withholdings) is **over $3,000** ($1,800 for Quebec) in either the current year or either of the previous two years.
- **Net tax owing** = Total tax payable − employer withholdings
## 2. **Summary of Mr. Boardman's Tax Situation**
| Year | Tax Payable | Withheld | Net Tax Owing |
|------|-------------|----------|---------------|
| 2023 | $62,350 | $61,600 | $750 |
| 2024 | $29,760 | $13,740 | $16,020 |
| 2025 | $52,370 | $47,390 | $4,980 |
---
## 3. **Step 1: Does Mr. Boardman Need to Make Instalments in 2025?**
Instalments are required if **net tax owing** > $3,000 in any of the previous two years, or the current year.
- **2023:** $750 (below threshold)
- **2024:** $16,020 (above threshold)
- **2025 (estimated):** $4,980 (above threshold)
**Conclusion:**
He must make instalments in 2025 because his net tax owing in 2024 and estimated for 2025 are both greater than $3,000.
---
## 4. **Step 2: How Much Must He Pay? (Calculation Methods)**
CRA allows three methods. You may pay the **least** of:
1. **2023 net tax owing**
2. **2024 net tax owing**
3. **Estimated 2025 net tax owing**
### Values:
- **2023:** $750
- **2024:** $16,020
- **2025:** $4,980
#### *Note:*
- If you pay based on the prior year (2024) or current year estimate (2025), you avoid instalment interest/penalty unless you underpay.
- If you pay just the 2023 amount ($750), you may owe interest/penalties if 2025 tax owing ends up being much higher.
---
## 5. **Step 3: Instalment Due Dates and Amounts**
### Due Dates
Personal income tax instalments are due **quarterly**:
- **March 15, 2025**
- **June 15, 2025**
- **September 15, 2025**
- **December 15, 2025**
### Minimum Amounts (using CRA's "no interest" method)
#### **a) 2024 Net Tax Owing Method ($16,020):**
- Four equal payments: $16,020 / 4 = **$4,005 per instalment**
#### **b) 2025 Estimate Method ($4,980):**
- Four equal payments: $4,980 / 4 = **$1,245 per instalment**
#### **c) 2023 Net Tax Owing Method ($750):**
- Four equal payments: $750 / 4 = **$187.50 per instalment**
---
## 6. **Recommendation**
- To avoid interest and penalties, pay at least the **2024 net tax owing** ($4,005 per instalment), or if your 2025 estimate is reliable, you may pay **$1,245 per instalment** based on your 2025 estimate.
- If you choose the lower amount and underpay, you may owe instalment interest.
- If you pay just the 2023 amount ($187.50 per instalment), you will certainly owe interest/penalties because your net tax owing will be much higher.
---
## 7. **Summary Table**
| Payment Method | Amount per Payment | Total for Year | Risk of Interest? |
|---------------------|-------------------|---------------|-------------------------------|
| 2023 net tax owing | $187.50 | $750 | **Yes** (likely underpayment) |
| 2024 net tax owing | $4,005 | $16,020 | No (if paid in full/on time) |
| 2025 estimated tax | $1,245 | $4,980 | No (if paid in full/on time) |
---
## 8. **Conclusion for Mr. Boardman**
- **Instalment payments are required in 2025.**
- **Recommended minimum:** $1,245 per quarter (based on 2025 estimate), due March 15, June 15, September 15, and December 15, 2025.
- **If you prefer safety:** Pay $4,005 per quarter (based on 2024).
- **If you pay less than your actual 2025 net tax owing, you may be charged interest.**
---
### **References**
- [CRA: Making instalment payments for individuals](https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/make-instalment-payments-individuals.html)
---
**If your 2025 situation changes, recalculate your estimated net tax owing and adjust payments as needed.**
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