Worksheet 2 – Example 1
Disclaimer
We do not guarantee the accuracy of this copy of the CRA website.
Scraped Page Content
Worksheet 2 – Example 1
Example
Corporation A has estimated its tax for 2016 at $900,000. The actual taxes for 2015 and 2014 are $912,000 and $60,000 respectively. Using Worksheet 2, we will determine the most advantageous option.
Instalment payments are due each month of the corporation's tax year.
Worksheet 2 – Calculating monthly instalment payments for 2016
| Description | Amount |
|---|---|
| Part I tax payable | 900,000 |
| Part VI tax payable | + |
| Part VI.1 tax payable | + |
| Part XII.1 tax payable | + |
| Total of Parts I, VI, VI.1 and XIII.1 tax1 | = 900,000 |
| Add: provincial and territorial tax payable before refundable credits2 | + |
| Total of Parts I, VI, VI.1 and XII.1 tax, as well as provincial and territorial tax | = 900,000 |
| Subtract: total 2016 estimated refundable credits (enter amount D from Worksheet 1) | – |
| Instalment base amount | = 900,000 |
| Divide by: | ÷ 12 |
| Each of the 12 payments due under option 1: | = 75,000 |
| Description | Amount |
|---|---|
| Part I tax payable | 912,000 |
| Part VI tax payable | + |
| Part VI.1 tax payable | + |
| Part XIII.1 tax payable | + |
| Total of Parts I, VI, VI.1 and XIII.1 tax1 | = 912,000 |
| Add: provincial and territorial tax payable before refundable credits2 | + |
| Total of Parts I, VI, VI.1 and XIII.1 tax, as well as provincial and territorial tax | = 912,000 |
| Subtract: total 2016 estimated refundable credits (enter amount D from Worksheet 1) | – |
| Instalment base amount | = 912,000 |
| Divide by: | ÷ 12 |
| Each of the 12 payments due under option 2: | = 76,000 |
| Description | Amount |
|---|---|
| Part I tax payable | 60,000 |
| Part VI tax payable | + |
| Part VI.1 tax payable | + |
| Part XIII.1 tax payable | + |
| Total of Parts I, VI, VI.1 and XIII.1 tax1 | = 60,000 |
| Add: provincial and territorial tax payable before refundable credits2 | + |
| Total of Parts I, VI, VI.1 and XIII.1 tax, as well as provincial and territorial tax | = 60,000 |
| Subtract: total 2016 estimated refundable credits (enter amount D from Worksheet 1) | – |
| Instalment base amount | = 60,000 |
| Divide by: | ÷ 12 |
| Each of the first 2 payments due under option 3: | = 5,000 |
| Previous-year instalment base (option 2 instalment base amount above) | 912,000 |
| Subtract: the total of payments 1 and 2 under option 3 | – |
| Difference | = 902,000 |
| Divide by: | ÷ 10 |
| Each of the remaining 10 payments due under option 3: | = 90,200 |
1 – If the total of Parts I, VI, VI.1 and XIII.1 tax is $3,000 or less for either 2016 or 2015, you do not have to make instalment payments on this amount for 2016.
2 – This amount is net of provincial and territorial non-refundable credits. If the provincial and territorial tax before refundable credits is $3,000 or less for either 2016 or 2015, you do not have to make instalment payments on this amount for 2016. Do not include provincial tax payable from Quebec or Alberta.
Option 1 is the most advantageous of the three options. Therefore, Corporation A will have to remit an instalment payment of $75,000 for each month. We may charge interest if the corporation uses option 1 and its estimated tax was lower than the year's actual tax and the tax calculated using option 2 or 3.
Forms and publications
- Corporation Instalment Guide (T7B-CORP)
- T2 Corporation – Income Tax Guide (T4012)
- Worksheet T2WS1, Calculating estimated tax payable and tax credits for 2016
- Worksheet T2WS2, Calculating monthly instalment payments for 2016
- Date modified:
- 2015-12-15