How To Pay Your Taxes

Taxes. One little word can strike fear into the hearts and minds of so many. Often people believe the process of paying their taxes to be complicated and long-winded which is why “How do I pay my taxes?” is one of the most common questions we get asked.

In truth, the process is straightforward and there are a few different routes you can take to suit your situation and preferences.

Online Banking

This method is a quick, easy 3 step process for both individual and business tax payments. Yes, it is that simple. You can pay your taxes –both personal and business–  to the CRA through your financial institution’s online banking app or website. Once you make your payment, it will usually be received by the CRA within 5 business days.  

Here are the steps to pay your taxes through online banking from the Government of Canada:

Individuals

1. Sign in to your financial institution’s online banking service for individuals.
2. Under “Add a payee” look for an option such as:
   • CRA (revenue) – current-year tax return
     • Use this option to make a payment for your current tax return. You can use this option only once per return.
   • CRA (revenue) – tax amount owing
     • Use this option to pay any amount owing.
   • CRA (revenue) – tax instalment
     • Use this option to make payments toward the future tax year.
   • CRA (revenue) – Canada emergency benefit repayment
     • Use this option to repay a Canada emergency response benefit, Canada emergency student benefit, a Canada recovery benefit, Canada recovery sickness benefit, or a Canada recovery caregiving benefit.
3. Enter your 9-digit social insurance number as your CRA account number. Ensure the number is accurate so that the CRA can apply your payment correctly.

Business

1. Sign in to your financial institution’s online banking service for businesses.
2. Under “Add a payee” look for an option such as:
   • Federal – Corporation Tax Payments – TXINS
   • Federal – GST/HST Payment – GST-P (GST-P)
   • Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)
   • Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
   • Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
   • Federal – Canada emergency wage subsidy repayment
3. Enter your 15-digit business number as your CRA account number. Ensure the number is accurate so that the CRA can apply your payment correctly.

If you’ve already paid your taxes through your online banking in the past, there’s no need to set up a new payee. Double-check that the last payee you set up is correct and you can use that payee again.

CRA Payment Service 

Another simple method for making your tax payment is to go through the CRA Payment Service and answer each question that appears on your screen. 

For individuals, select “Make a payment”, then “an individual?” and then “Individual Income tax (T1) including instalments and amounts owing” and away you go. 

For businesses, select “Make a payment, then “business?” and then the tax type you’re looking to pay.  

After making these selections, you will be given a choice on how you want to pay. CRA now allows you to use your credit card by paying through Plastic, a third-party service provider, but be aware that they will also charge an additional 2.5% fee to use that card. 

PaySimply, another third-party service provider, will accept the following payment methods with the attached fees: 

• Credit cards – 2.5% fee
• Pay with cash or debit at Canada Post – $3.95 – $7.95
• Interact E-transfer – 1% fee
• PayPal – 2.5% fee
• PayBright – fee information not disclosed  

Bank Payment

A third option is to pay your taxes is through your Canadian financial institution. This process requires a personalized remittance voucher to ensure the payment is accurately applied to your tax account by the CRA. 

Order your remittance papers.

Or, you can use our services at Sync Accounting and we will provide you with remittance papers with the tax filings we prepare. 

Important Notes

Limits

It’s very important to be aware that any regular payment limits or restrictions will still apply to your tax payment. Make sure to give yourself enough time to gather the required funds, or make multiple payments, so you don’t miss the deadline.

Shorthand

Below is a list of common shorthand and definitions used in forms discussing taxes and finance that you should be aware of:

• RC – Corporate taxes
• RT – GST
• RP – Payroll    
• Instalment – Paying taxes for the upcoming year/period
• Amount due – Payment relating to the current tax year/period
• Balance owing – Paying taxes for prior year/period

We don’t believe that the experience of paying tax should be so taxing and we’d like to make it as stress-free as possible for you. We hope the methods and corresponding instructions in this post are helpful to you this tax season.