Canada: Contractor vs Employee
A Canadian self-employed contractor doesn't pay EI but does pay both halves of CPP. See how that nets out against employee take-home on the same income.
How to use it
- Enter your annual income. The gross salary or business income to compare.
- Compare the two. Employee (tax + CPP + EI) versus self-employed (tax + double CPP, no EI).
- See the net difference. PayGlance nets the EI saving against the extra CPP.
FAQs
Do contractors pay more or less than employees in Canada?
On the same income they're usually close. A contractor saves employment insurance (EI) but pays both the employee and employer halves of CPP, so the net difference is small at the individual level - before considering deductible business expenses or incorporating.
Should I incorporate?
A small-business corporation can change the picture materially through the small-business tax rate and salary/dividend planning. This tool compares employee versus self-employed sole proprietor, not the corporate route.
Is it exact?
It's an estimate using the Ontario baseline; it ignores business expenses, GST/HST and provincial differences.