Instalment penalty

When instalment interest is more than $1,000, we may charge an instalment penalty under section 163.1 of the Income Tax Act.

We calculate the penalty by subtracting from the instalment interest the greater of:

• $1,000; and
• 25% of the instalment interest calculated if no instalment payment had been made for the year.

One-half of the difference is the amount of the penalty.

See our example of how to calculate instalment interest and penalty.

Forms and publications

• Corporation Instalment Guide (T7B-CORP)

Date modified:

2017-02-07