Nov 12, 2026
Retirees who send the Canada Revenue Agency (CRA) money every quarter could get a break under Budget 2026, although their annual tax bill won’t change.
The federal government has proposed raising the threshold that triggers instalments, starting with the 2028 tax year. Ottawa estimates that with the change, which would require amendments to the Income Tax Act, nearly 1.1 million individuals would no longer need to pay by instalments.
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For retirees who qualify, this would mean no quarterly deadlines, just one balance owing at tax time.
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Why retirees end up paying quarterly
During your working years, an employer typically deducts income tax from each paycheque. However, retirement income often has less tax withheld, leaving you with a balance you need to pay later.
Canada Pension Plan (CPP) and Old Age Security (OAS) payments do not automatically have regular income tax deducted unless you request it. Financial institutions also do not have to withhold tax on the minimum annual withdrawal from a registered retirement income fund (RRIF), though withholding tax generally applies to withdrawals above that minimum.
As a result, many retirees owe enough tax to trigger instalments from their retirement income alone. Under current CRA rules, individuals generally must pay instalments when their net tax owing exceeds $3,000 in the current year and in either of the two preceding years. For Quebec residents, the threshold is $1,800.
Payments are generally due March 15, June 15, September 15 and December 15, with an extension to the next business day when a deadline falls on a weekend or recognized holiday. Late or insufficient payments can attract interest and penalties.
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Who stands to benefit
Under Budget 2026, the proposed thresholds would rise to:
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- $7,500 outside Quebec, up from $3,000
- $4,500 for Quebec residents under the federal rules, up from $1,800
Both thresholds would then be indexed to inflation and rounded to the nearest $500. The changes would apply to taxation years beginning on or after Jan. 1, 2028.
The clear beneficiaries would be those whose unpaid annual tax regularly exceeds today’s threshold but remains at or below the proposed one. While the change applies to Canadians of all ages, retirees make up a significant part of that group. According to Finance Canada’s impact analysis, individuals benefiting from the higher threshold have a median age of 65 and median total income of $93,000.
Check your next payment before changing anything
For now, continue using the existing instalment rules, as the proposed 2028 thresholds are not yet in effect. If you’re expecting a required Dec. 15, 2026 payment, check your CRA account for your instalment reminder and review the amount with your tax preparer if your income has changed.
Retirees who would prefer regular deductions can already request them from CPP or OAS, or increase withholding on pension income. According to the CRA, you may be able to reduce or eliminate instalment payments by setting aside additional withholding amounts.
If the higher thresholds become law and you qualify, plan for how you will set aside the unpaid tax before you cancel any scheduled payments. Budget 2026 also proposes moving the tax-filing and balance-due date for individuals from April 30 to May 15, starting with the 2027 tax year. That means tax owing for 2028 would be due May 15, 2029. A monthly transfer to a separate savings account can help keep that money ready for the deadline.
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Colin Graves is a Winnipeg-based financial writer and editor whose work has been featured in publications such as Time, MoneySense, MapleMoney, Retire Happy, The College Investor, and more. Before becoming a full-time writer, Colin was a bank manager for over 15 years.
