How much more should a contract pay than a salary?

As a rule of thumb, 25% to 50% more per hour. A $90,000 salary is about $46 an hour over a 37.5-hour week, but the job also comes with the employer's half of CPP, EI, a match, benefits and paid vacation, and a contractor bills only 45 to 48 weeks a year. The calculator solves the exact rate for your numbers.

What is an employer RRSP match worth?

Its full amount, every year, as long as you contribute enough to get it. A 4% match on $90,000 is $3,600 a year, which is an instant 100% return on the $3,600 you put in. A contractor has to fund all of it from the contract rate.

Do contractors pay more CPP?

Yes. An employee pays 5.95% of earnings between $3,500 and the ceiling and the employer pays the same again. A self-employed contractor pays both halves, 11.9%, on net business income, plus both halves of the CPP2 contribution above the first ceiling. Half of it is deductible.

Do contractors get EI?

Not regular EI. Self-employed people pay no EI premiums and cannot claim regular benefits if the contract ends. They can opt in for special benefits (maternity, parental, sickness) by registering with Service Canada and paying the employee premium.

How many weeks can a contractor actually bill?

Usually 45 to 48. Vacation, statutory holidays, sick days, training and the gaps between contracts are all unpaid. The calculator defaults to 52 weeks less your vacation weeks and two more for holidays and gaps; change it if your contracts are back to back.

Does the calculator include GST/HST?

No, because it is a wash: you add it to your invoices, collect it for the CRA and remit it, less the tax on your expenses. Once revenue passes $30,000 in four quarters you must register. It is not income and should not be counted in the rate comparison.

Should I incorporate instead of being a sole proprietor?

Only if you will leave a meaningful share of the profit in the company, where it is taxed at about 12% instead of your personal rate. If you spend what you earn, incorporation adds $1,500 to $3,000 a year of costs for little tax benefit. The salary vs dividends calculator shows the numbers.

Could the CRA say I am really an employee?

Yes. If one client controls your hours, provides your tools and you cannot subcontract or take other clients, the CRA may treat you as an employee (or a personal services business if incorporated), which removes most of the deductions. RC4110 sets out the tests.

Contract vs Full-Time Calculator: What Rate Matches a Salary?

Tells you whether a contract rate or a full-time salary leaves you with more, once you count what the employer quietly pays for: half your CPP, 1.4 times your EI, the RRSP match, health and dental coverage, and paid vacation. You get the hourly rate a contract must pay to truly match the job.

The full-time job leaves you ahead by$6,400 a yearTo match the $90,000 job with its benefits, the contract needs to pay at least $60.17 an hour ($106,050 a year), 30% more than the job's $46.15 an hour. The gap is the benefits, the employer's half of CPP and EI, paid vacation, and the weeks a contractor cannot bill.

Cash in handBenefits the employer pays for

Per year	Full-time job	Contract
Pay	$90,000	$96,938
Business expenses	—	− $3,000
Income tax, CPP and EI ¹	− $22,803	− $26,540
Cash in hand	$67,197	$67,397
Employer RRSP or pension match (4%)	+ $3,600	—
Health and dental coverage ²	+ $3,000	—
What you end up with	$73,797	$67,397
¹ Contract pay is 37.5 hours × 47 billable weeks. The contractor pays both halves of CPP ($9,293) and no EI; the employee's line includes the employee half of CPP and EI. ² Counted at what it would cost you to buy yourself. The job also includes 3 weeks of paid vacation ($5,192) and $6,219 of employer CPP and EI you never see.

What the job's benefits are worth: about 20% on top of the salary once you count the match, coverage, paid vacation and the employer's payroll contributions. That is why the rule of thumb is that a contract should pay 25% to 50% more per hour than the equivalent salary.

Show the math

Employee: 2026 Ontario take-home on $90,000 (T4127 payroll formulas, basic claim only), plus the employer's match, pension contribution and health coverage at face value. Contractor: revenue = rate × billable hours × weeks (default 47 weeks: 52 less your vacation weeks, stat holidays and gaps between contracts), less expenses, then income tax and both halves of CPP as a sole proprietor (11.9% to $74,600); no EI, no paid vacation, HST collected and remitted is a wash. The equivalent rate solves for the contractor's after-tax cash equal to the employee's total. Not modelled: incorporating (see salary vs dividends), the value of job security and EI eligibility, RRSP room differences, and the tax deferral of the match.

If you take the contract

Contracting is a business from the first invoice. Three registrations and one habit.

Register for GST/HST once you pass $30,000 of billings, or right away so you can charge it and claim input tax credits.Register for a GST/HST account ↗
Set aside the percentage the self-employed calculator gives you from every invoice; the balance is due April 30.Paying your income tax by instalments ↗
Check whether the CRA would see you as an employee in disguise (one client, their hours, their tools); it changes who owes CPP and EI.Employee or self-employed? ↗

Common questions

Frequently asked questions

How much more should a contract pay than a salary?: As a rule of thumb, 25% to 50% more per hour. A $90,000 salary is about $46 an hour over a 37.5-hour week, but the job also comes with the employer's half of CPP, EI, a match, benefits and paid vacation, and a contractor bills only 45 to 48 weeks a year. The calculator solves the exact rate for your numbers.
What is an employer RRSP match worth?: Its full amount, every year, as long as you contribute enough to get it. A 4% match on $90,000 is $3,600 a year, which is an instant 100% return on the $3,600 you put in. A contractor has to fund all of it from the contract rate.
Do contractors pay more CPP?: Yes. An employee pays 5.95% of earnings between $3,500 and the ceiling and the employer pays the same again. A self-employed contractor pays both halves, 11.9%, on net business income, plus both halves of the CPP2 contribution above the first ceiling. Half of it is deductible.
Do contractors get EI?: Not regular EI. Self-employed people pay no EI premiums and cannot claim regular benefits if the contract ends. They can opt in for special benefits (maternity, parental, sickness) by registering with Service Canada and paying the employee premium.
How many weeks can a contractor actually bill?: Usually 45 to 48. Vacation, statutory holidays, sick days, training and the gaps between contracts are all unpaid. The calculator defaults to 52 weeks less your vacation weeks and two more for holidays and gaps; change it if your contracts are back to back.
Does the calculator include GST/HST?: No, because it is a wash: you add it to your invoices, collect it for the CRA and remit it, less the tax on your expenses. Once revenue passes $30,000 in four quarters you must register. It is not income and should not be counted in the rate comparison.
Should I incorporate instead of being a sole proprietor?: Only if you will leave a meaningful share of the profit in the company, where it is taxed at about 12% instead of your personal rate. If you spend what you earn, incorporation adds $1,500 to $3,000 a year of costs for little tax benefit. The salary vs dividends calculator shows the numbers.
Could the CRA say I am really an employee?: Yes. If one client controls your hours, provides your tools and you cannot subcontract or take other clients, the CRA may treat you as an employee (or a personal services business if incorporated), which removes most of the deductions. RC4110 sets out the tests.

Full guide: how it works, a worked example, every rule and every source Read the guide →

Sources

Every figure on this page comes from one of these primary sources. Data last verified September 7, 2026.

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Data verified for tax year 2026: September 7, 2026 Updated September 7, 2026 By Nishant Malik, founder of GlassLayer