How much should I set aside from my self-employed income (SkiptheDishes) for tax purpose. According to your article I should set aside 5.05% for Ontario.

[jessete]

As they don't tax off your income, you get what you earn.

[TurboTaxSusan · Accepted solution]

Which article are you referring to, this one?

https://turbotax.intuit.ca/tips/the-least-taxing-place-in-canada-2079

The numbers there are really more for comparison purposes. Yes, the minimum tax rate for Ontario is 5.05%, but that is on the first $42,960 of taxable income. If you made more than $42,960, anything after that will be taxed at a higher rate. There is also Federal Taxes, which is 15% on the first $46,605 of taxable income.

And note the phrase "taxable income". Expenses and deductions can lower taxable income, so you would still have the 5.05%+15% rate, but it would be applied to less income. Credits can lower tax payable. So the rate of tax you actually pay may come out to be less than the minimum.

In TurboTax, you would put your full self-employment income, and after you go through the full tax return interview, the software will determine what your tax payable will be.