The short answer: set aside 25–30% of every payment you receive.
If you’re just starting out and want a number to work with, that’s it. Transfer 25–30% to a separate account every time a client pays you, and don’t touch it until tax time.
If you want to understand why, and whether your number should be higher or lower, here’s the breakdown.
Why you owe more than you expect
When you’re employed, your employer handles a lot in the background: withholding income tax, remitting payroll deductions, paying half your CPP contributions. As a freelancer, none of that happens. You get the full payment, and you’re on the hook for everything.
There are three things you’re paying:
- Income tax (federal + provincial, based on your net income)
- CPP contributions (both the employee and employer share, about 11.9% of net earnings)
- GST/HST (if you earn over $30,000, you collect this on behalf of the CRA and remit it separately)
CPP is the one that surprises people most. In a regular job, your employer covers roughly half. Self-employed, you cover both halves. For the 2025 tax year, that’s 11.9% on net earnings up to $73,200, which works out to about $8,294 on its own.
What the numbers actually look like
Rough estimates for a freelancer in Ontario (2025 tax year, before deductions). Your province, income mix, and expenses will all shift this.
| Gross Freelance Income | Approx. Income Tax | Approx. CPP | Total Owing | % to Set Aside |
|---|---|---|---|---|
| $30,000 | ~$2,700 | ~$3,154 | ~$5,854 | ~19% |
| $50,000 | ~$6,500 | ~$5,534 | ~$12,034 | ~24% |
| $70,000 | ~$10,300 | ~$7,914 | ~$18,214 | ~26% |
| $90,000 | ~$15,700 | ~$8,990 | ~$24,685 | ~27% |
At lower incomes, CPP is actually a bigger chunk than income tax. CPP maxes out around $73,200 and stops growing, but income tax keeps climbing as you earn more. Federal and provincial rates stack on top of each other, which is why the percentages creep up at higher incomes.
If you have significant business expenses (home office, vehicle, software), your actual bill will be lower than this table shows.
GST/HST is not your money
Once your revenue crosses $30,000 in any 12-month period, you’re required to register for GST/HST and charge it on your invoices.
This money is not your income. It belongs to the CRA. The mistake people make is depositing it into their regular account and spending it, then getting hit with a remittance bill they can’t cover.
Open a dedicated account just for GST/HST. Every time you collect it, transfer it there immediately.
The upside: once you’re registered, you can claim Input Tax Credits (ITCs) to recover the GST/HST you paid on business expenses. That laptop, software subscription, or course you bought for work? You get the tax portion back.
A simple setup that works
You don’t need to be precise every week. The basics:
- Get paid, deposit to your main business account
- Transfer 25–30% to a savings account you label “Tax”
- Transfer any GST/HST collected to a separate account labelled “GST/HST”
- Leave both alone until payment is due
Most freelancers pay taxes once a year. Payment is due April 30, filing deadline is June 15. If your tax bill last year was over $3,000, the CRA may require you to pay quarterly installments the following year (March, June, September, December).
Should you set aside more or less?
Set aside more (30%+) if:
- You’re earning over $60,000
- You live in a high-tax province (Ontario, BC, Quebec)
- You have few deductions
You might be fine with less (20–25%) if:
- You have significant deductible expenses that bring down your net income
- You’re in a lower tax bracket
- You’re tracking GST/HST separately already
When in doubt, over-save. A refund is a nice surprise. An unexpected bill in April is not.
What counts as a deductible expense
Common deductible expenses for freelancers:
- Home office (if you have a dedicated workspace)
- Phone and internet (business portion only)
- Equipment and software
- Professional development and courses
- Accounting and bookkeeping software (yes, Accountly counts)
- Vehicle use for business travel (you’ll need a mileage log)
- Client meals (50% of the cost)
Track these throughout the year. Every $1,000 in deductions saves you roughly $250–330 in taxes depending on your bracket.
Accountly lets you track income and expenses in one place, snap receipts as you go, and see where you stand without waiting until April to find out.
Frequently asked questions
How much should a freelancer in Canada set aside for taxes? Most Canadian freelancers should set aside 25–30% of gross income. Under $40,000 you may be fine with 20–25%. Over $70,000, lean toward 30–35%.
Do Canadian freelancers pay CPP? Yes. Self-employed Canadians pay both the employee and employer portions of CPP, about 11.9% of net earnings in 2025, up to a maximum of $8,294.
When do Canadian freelancers have to pay taxes? Tax payment is due April 30. The filing deadline is June 15 if you’re self-employed, but any balance owing accrues interest after April 30.
What happens if I don’t set aside enough? You’ll owe the balance in April. If you can’t pay, the CRA charges interest (currently around 10% annually) on amounts owing. Repeated shortfalls can trigger a requirement to pay quarterly installments.
Do I need to charge GST/HST as a freelancer? Only once your revenue exceeds $30,000 in a 12-month period. Below that you’re considered a “small supplier” and registration is optional, though sometimes worth doing early for the Input Tax Credit benefits.
How does Accountly help with this? Accountly tracks your income and expenses throughout the year so you can see your approximate tax position at any time, not just in April. You can snap receipts, categorize expenses, and pull reports that make filing straightforward. Try it free.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.
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