Enter your business income and expenses to see the income tax and CPP on your self-employed profit, what to set aside each month, and whether you'll need to pay instalments.
Before expenses, for the year
What you can deduct
Quebec has its own rules, not covered here
Set aside for tax
$16,371
25% of your $65,000 profit · about $1,364 a month
What this means
No one takes tax from your income as you go, so move 25% of what you earn into a separate account as it comes in. Each extra $100 of profit costs about $39 in tax and charges.
If you’ll owe more than $3,000 in net tax, the CRA asks for quarterly instalments, due 15 March, 15 June, 15 September and 15 December. Self-employed returns are due June 15, but any balance is due April 30.
RRSP contributions are deducted from your income, so they cut this bill at your top rate.
| Profit | $65,000 |
| CPP (both halves) | −$7,319 |
| Federal income tax | −$5,915 |
| Ontario income tax | −$2,537 |
| Ontario Health Premium | −$600 |
| You keep | $48,629 |
Last updated
Federal and provincial income tax on your net profit, plus both the employee and employer halves of CPP, 11.9% of earnings between $3,500 and the yearly maximum, and a second tier of 8% on earnings from there up to $85,000. Many people set aside 25% to 35% of their profit.
Employees and employers each pay half of CPP. When you work for yourself you're both, so you pay both halves. The employer's half is deducted from your income, which lowers your income tax a little.
If your net tax owing is more than $3,000 this year and in either of the two years before, the CRA asks you to pay quarterly instalments on March 15, June 15, September 15 and December 15. It sends reminders with suggested amounts.
Self-employed people have until June 15 to file, but any balance owing is still due April 30, so interest starts then.
Once your taxable sales pass $30,000 in four calendar quarters in a row, you must register and charge GST/HST. Below that you can register voluntarily, which lets you claim back GST/HST on business costs.