29 April 2002 Ministerial Correspondence 2002-0120504 - Instalments

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

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Dear Colleague:

Thank you for your letter of January 14, 2002, addressed to my predecessor, the Honourable Martin Cauchon, outlining the concerns of your constituent about the calculation of income tax instalments.

I am pleased to inform you that your constituent will not be required to increase his instalment payments because of his registered retirement income fund (RRIF) withdrawal in 2002. The quarterly instalments that he is required to make for 2002 will not exceed those that he is required to make based on his income tax situation for 2001. If these instalments are made on time and any balance of tax owing is paid by April 30, 2003, no interest or penalty will be charged.

There is another option available to your constituent that can more closely match the timing of tax payments with the receipt of the RRIF income. Instead of basing his 2002 instalments on his 2001 tax situation, he can choose to base these instalment payments on the tax he expects to owe for 2002. Income tax will be withheld from the payment out of the RRIF. Your constituent can request the payer of the RRIF to increase the amount of tax that is otherwise required to be withheld at source. The tax withheld from the RRIF payment will reduce the balance of tax that he would otherwise owe for 2002 and, therefore, the instalments he is required to make for 2002. If this option is chosen and payments are made by their due dates, your constituent will not be charged interest unless the amount he estimated when calculating his tax owing for 2002 was too low.

The Canada Customs and Revenue Agency (CCRA) has prepared a pamphlet entitled Paying Your Income Tax by Instalments, which your constituent may find helpful in determining which option is best for him. I am attaching a copy of the pamphlet, for his convenience. It is also available on the CCRA's Web site on the Internet at www.ccra-adrc.gc.ca, or a copy can be obtained at any tax services office.

If your constituent has any additional questions on this matter, I invite him to contact Mr. Phillip McCutchan, Assistant Director of Revenue Collections with the Calgary Tax Services Office, by calling 0-403-691-6950 collect, or by writing to 220 - 4th Avenue South East, Calgary AB T2G 0L1. Mr. McCutchan is aware of our correspondence and will be pleased to provide assistance.

I trust that the above information will assist you in responding to your constituent.

Sincerely,

Elinor Caplan

Christine Savage
(613) 957-8957
February 4, 2002
2002-012050