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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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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

This is AI generated Response.
Asked by: Rohit Vaghela
Created at: 2026-02-04 11:14:25

Thought Process:

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**Giving tax advice for Canada** I need to provide tax installment advice for Canada, focusing on the terms like "federal and provincial/territorial." Individuals are required to pay installments if their net tax owing exceeds $3,000 in the current year and either of the two preceding years, or specifically in Quebec, where the threshold is $1,800. To clarify, for 2024, this applies if your net tax owing is above $3,000 in 2024 and either 2023 or 2022.**Clarifying net tax owing** I realize that "net tax owing" according to the CRA is the total balance due after credits and withholdings. For calculating installment rules, "net tax owing" means my tax liability minus amounts withheld and refundable credits. Simplified, it's tax payable minus tax withheld. I need to compare the net tax owing for 2023, 2024, and the expected 2025 against the $3,000 threshold. For 2024, the amount is significantly over $3,000, confirming the need for installments in 2025 as well.**Calculating installment due dates** So, the user has to pay installments in 2025, and I need to figure out the due dates. They are set for March 15, June 15, September 15, and December 15. If a due date falls on a weekend, it's moved to the next business day. For 2025, March 15 is indeed a Saturday, and I need to double-check the dates. It looks like January 1, 2025 falls on a Wednesday, meaning 2024, a leap year, starts on a Monday.**Calculating due dates for installments** For March 15, 2025, I computed that it falls on a Saturday. Since that's a weekend, the due date is moved to Monday, March 17, 2025. Now for June 15, 2025: January 1 is a Wednesday, and since March 15 is a Saturday, I realize that April 1 would be a Tuesday. Rather than overcomplicating, it’s simpler to state the standard due dates of March 15, June 15, September 15, and December 15, and just note that if they fall on a weekend, they shift to the next business day.**Establishing due dates and minimum amounts** I can provide adjusted due dates for installments in 2025. March 15 falls on a Saturday, moving the due date to March 17. For June 15, it’s Sunday, making that due date June 16. For September 15, that's a Monday, so no change there. December 15 is also a Monday. Now, regarding the minimum amount to avoid penalties, the CRA allows three options: no-calculation, prior-year, and current-year. The taxpayer can pay the smallest total without interest by meeting each option's requirements. For the prior-year method, the amounts are straightforward: one-quarter of the previous year's net tax owed. To avoid interest, it's crucial to pay by the due dates!**Calculating minimum payments and due dates** I’ve determined that the instalment payments for 2025 are indeed required since the expected net tax owing is $4,980, which is over the $3,000 threshold. The payment due dates are March 17, June 16, September 15, and December 15. For each method, the amounts are: under the no-calculation option, it’s $187.50 for March and June, $7,635 for September, and $8,010 for December. The prior-year option yields $4,005 on each due date. The current-year option would be $1,245 each. To avoid interest, using the current-year option is recommended, provided the actual 2025 net tax remains around $4,980.**Calculating net tax and instalments** I’ll show the calculations, starting with the net tax owing by year: for 2023, it’s $750; for 2024, it’s $16,020; and for 2025, it’s $4,980. Since the expected 2025 tax exceeds $3,000 and so does 2024's amount, instalments are required. I’ll recommend current-year payments of $1,245 each due on March 17, June 16, September 15, and December 15, 2025. I'll also mention that if withholdings increase sufficiently, he might avoid instalments. Finally, catching up on missed payments early can reduce interest.

Final Answer:

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Below is a step‑by‑step determination of whether Mr. Boardman must make 2025 instalments, and the minimum amounts and due dates under the CRA rules. Step 1: Compute “net tax owing” for each year Net tax owing = combined federal/provincial tax payable − employer withholdings. - 2023: - 62,350 − 61,600 = 750 - 2024: - 29,760 − 13,740 = 16,020 - 2025 (expected): - 52,370 − 47,390 = 4,980 Step 2: Do 2025 instalments apply? CRA rule (outside Quebec): You have to pay instalments for the current year if BOTH: - Your net tax owing for the current year is more than $3,000, AND - Your net tax owing was more than $3,000 in either of the two previous years. Here: - 2025 expected net tax owing = 4,980 > 3,000, and - 2024 net tax owing = 16,020 > 3,000 (even though 2023 was only 750, that’s okay; you only need one of the two prior years) Therefore, instalments are required for 2025. Note: If he were a resident of Quebec, the threshold is $1,800 instead of $3,000. The conclusion would be the same (he would still need to pay instalments). Step 3: Compute the 2025 instalment amounts under the three CRA options You can avoid instalment interest/penalties by paying on time using ANY one of these options. The “minimum” total cash outlay is the smallest of the three options if your 2025 estimate holds true. Option A: No‑calculation option (uses 2023 and 2024 actuals) - March instalment: 1/4 of 2023 net tax owing = 750 × 1/4 = 187.50 - June instalment: 1/4 of 2023 net tax owing = 187.50 - September instalment: 1/2 of 2024 net tax owing − (March + June) = (16,020 × 1/2) − (187.50 + 187.50) = 8,010 − 375.00 = 7,635.00 - December instalment: 1/2 of 2024 net tax owing = 8,010.00 Total paid in 2025 under this option = 187.50 + 187.50 + 7,635.00 + 8,010.00 = 16,020.00 Option B: Prior‑year option (uses 2024 net tax owing) - 2024 net tax owing = 16,020 - Four equal payments: 16,020 ÷ 4 = 4,005.00 each (March, June, September, December) Total paid in 2025 under this option = 16,020.00 Option C: Current‑year option (uses 2025 expected net tax owing) - 2025 expected net tax owing = 4,980 - Four equal payments: 4,980 ÷ 4 = 1,245.00 each (March, June, September, December) Total paid in 2025 under this option = 4,980.00 Result: The minimum total amount to pay in 2025 (to avoid instalment interest) is under the current‑year option: $1,245.00 each quarter, provided his actual 2025 net tax owing ends up at or below $4,980. Step 4: 2025 instalment due dates Standard quarterly due dates for individuals are March 15, June 15, September 15, and December 15. When the 15th falls on a weekend or holiday, the due date is the next business day. For 2025: - March 15, 2025 is a Saturday → due Monday, March 17, 2025 - June 15, 2025 is a Sunday → due Monday, June 16, 2025 - September 15, 2025 is a Monday → due Monday, September 15, 2025 - December 15, 2025 is a Monday → due Monday, December 15, 2025 Putting it together: What to pay and when - To minimize cash outlay and still avoid instalment interest (assuming his 2025 estimate holds): - Pay $1,245.00 on March 17, 2025 - Pay $1,245.00 on June 16, 2025 - Pay $1,245.00 on September 15, 2025 - Pay $1,245.00 on December 15, 2025 - If he wants a “safe” schedule regardless of how 2025 turns out, he can instead follow the CRA no‑calculation amounts (these will also match what the CRA’s February instalment reminder would show): - $187.50 on March 17, 2025 - $187.50 on June 16, 2025 - $7,635.00 on September 15, 2025 - $8,010.00 on December 15, 2025 Practical notes and planning tips - If Mr. Boardman increases his payroll withholdings early in 2025 so that his net tax owing for 2025 will be $3,000 or less by year‑end, he could avoid the need to make instalments and avoid interest, even if he skips the March/June instalments. However, until those extra withholdings are actually made, the safer course is to follow one of the instalment options above. - If his actual 2025 net tax owing ends up higher than $4,980, the current‑year option amounts shown would be too low; to avoid any interest in that case, he’d need to top up earlier in the year or switch to one of the other options. - If he misses an instalment date, paying as soon as possible reduces potential instalment interest.

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