Tax Reserve Calculator

ExampleAnnual income $100,000 · Monthly revenue $10,000 · Ontario · Including CPP

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🏦Tax Reserve Planner

Monthly holdback · Ontario · 2026

$3,375/mo set aside · 0.3% of deposits · 0.2% tax + 0.1% GST/HST on each deposit
○ First year above the threshold·RRSP −$5,000·Total owing $24,894

Holdback rate

0.3%

of each deposit

GST/HST / mo

$1,300

separate account

Q instalment

-

not required yet

Freelance reserve / yr

$24,894

tax + CPP from contracts

💰Revenue & income
Average monthly gross revenue?
$
Business expense %?
%
Prior year net tax owing?
$
Sample invoice (pre-tax)
$
💵T4 + deductions
Planned RRSP contribution?
$
Combined taxable$80,354
Income tax$15,602
Self-employ CPP$9,292
Set aside from freelance$24,894
🧾Per-invoice holdback
On a $5,000 pre-tax invoice:
Income tax + CPP reserve$1,038
GST/HST (13%)$650
You keep (operating)$3,312
Client pays $5,650 total incl. tax.
📆Instalment status
First year above the threshold - pay the balance by April 30. Instalments likely start next year if you owe over the threshold again.
Filing: June 15 · Balance due: April 30
📊Annual breakdown
Freelance net income$90,000
RRSP deduction−$5,000
Combined taxable income$80,354
Federal + provincial tax$15,602
Self-employed CPP + CPP2$9,292
CPP employer deduction−$4,646
Total tax + CPP owing$24,894
Freelance reserve needed$24,894
Monthly tax reserve$2,075/mo
Monthly GST/HST holdback$1,300/mo
📅Cumulative holdback▼
📅CRA tax deadlines
Mar 15
Q1 instalment
Apr 30
Balance owing due
Jun 15
Q2 + T1 filing (self-employed)
Sep 15
Q3 instalment
Dec 15
Q4 instalment
Late instalments - CRA charges interest (~8–10%/yr) on shortfalls.
🧾GST / HST remittance▲
HST 13%13%
▸$30,000 threshold: register once revenue exceeds $30k in 12 months.
▸Separate account: GST/HST collected is CRA's money - never mix with operating cash.
💡Self-employed rules▼
🔗Related▼

What's Next?

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2026 CRA estimates. Instalments if owing >$3,000 (QC: $1,800) in current year and a prior year. Not tax advice - consult a CPA.

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About this calculator

Updated April 2026

This self-employed tax reserve calculator tells you how much of each invoice to set aside for CRA - income tax, both sides of CPP, and HST/GST if you're registered. Using this tool monthly prevents the #1 new-freelancer disaster: owing $20,000+ at tax time with none of it saved.

What you can do with it

  • Calculate your per-invoice tax reserve as a % of gross billing.
  • Include both CPP portions + HST remittance in your holdback.
  • See how much to set aside if you also have T4 income alongside contracts.
  • Plan quarterly CRA instalments so you avoid instalment interest.

How the math works

Tax reserve = federal + provincial income tax on your total projected annual income (at your marginal bracket) + combined 11.9% CPP and 8.0% CPP2 + HST collected (if registered) minus expected input tax credits. The calculator converts this to a holdback percentage of gross billing so you can flag the amount aside on each deposit.

Canadian context - 2026

A typical single self-employed Canadian earning $120,000 net should hold back roughly 33–38% of gross billings (~30% income tax + 8% self-employed CPP). If you're HST-registered at 13%, your holdback on gross billings is closer to 42–45% until you pay HST each quarter.

Frequently asked questions

How much should I set aside for taxes as a self-employed person in Canada?

A rough rule of thumb is 25–35% of gross income, depending on your province and total earnings. This covers federal and provincial income tax, CPP self-employed contributions (both employee and employer shares), and any HST/GST remittances. The tax reserve calculator gives a more precise estimate based on your province and income.

What happens if I miss a CRA instalment deadline?

CRA charges instalment interest on late or insufficient quarterly payments. The rate is the prescribed interest rate (currently 8–10% annualized) on the shortfall. If you consistently underpay, CRA may also add instalment penalties. Setting aside funds each month into a separate account avoids this risk.

Should I register for GST/HST?

GST/HST registration is mandatory once your worldwide taxable revenues exceed $30,000 in a calendar quarter or over four consecutive quarters. Some businesses register voluntarily before that threshold to claim input tax credits on business purchases. Once registered, you must collect and remit GST/HST on taxable supplies.

Go deeper - related guides

Long-form explainers that pair with this calculator.