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.

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, 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 CPP2 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 when a 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 gaps between contracts are all unpaid. Enter more weeks if your contracts run back to back.

Does the calculator include GST/HST?

No, because it is a wash. You add it to 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.

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, incorporating adds $1,500 to $3,000 a year of costs for little benefit.

Could the CRA say I am really an employee?

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

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

See whether a contract rate or a full-time salary leaves you with more. It counts what the employer pays on your behalf, such as half your CPP, the RRSP match, health coverage and paid vacation. You get the hourly rate a contract must pay to match the job.

The full-time job leaves you ahead by$6,400 a yearTo match the $90,000 job and its benefits, the contract needs to pay at least $60.17 an hour ($106,050 a year). That is 30% more than the job's $46.15 an hour. The gap covers the benefits, the employer's half of CPP and EI, paid vacation, and the weeks you 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. As a contractor you pay both halves of CPP ($9,293) and no EI. The job's line includes your half of CPP and EI. ² Counted at what it would cost you to buy yourself. The job also gives you 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 says a contract should pay 25% to 50% more an hour than the same 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. The default is 47 weeks, which is 52 less your vacation weeks, stat holidays and gaps between contracts. Expenses come off, then income tax and both halves of CPP as a sole proprietor (11.9% up to $74,600). No EI and no paid vacation. HST you collect and remit is a wash. The matching rate is the hourly rate where the contractor's after-tax cash equals the employee's total. Not modelled: incorporating (see salary vs dividends), the value of job security and EI, RRSP room differences, and the tax deferral on the match.

How this calculator works

The full-time side starts with take-home pay on the salary, using the CRA’s payroll formulas for your province. Then it adds back what the employer pays for you: the RRSP or pension match, any defined-benefit pension contribution, and the value of health and dental coverage. Paid vacation is already inside the salary, so it is shown as a reminder, not added.

The contract side multiplies the hourly rate by billable hours and weeks, subtracts business expenses, then applies income tax and both halves of CPP as a sole proprietor. There is no EI, no paid time off and no employer contributions.

The equivalent rate is the contract rate at which the contractor’s after-tax cash equals the employee’s take-home plus benefits. The premium is that rate compared with the salary divided by the job’s hours.

Worked example: $90,000 job vs $55 an hour in Ontario

Line	Full-time	Contract
Pay	$90,000	$96,938 (37.5 h × 47 weeks at $55)
Business expenses	—	− $3,000
Income tax	included	− $17,247
CPP (both halves for the contractor)	included	− $9,293
Take-home cash	$67,197	$67,397
Employer RRSP match (4%)	+ $3,600	—
Health and dental coverage	+ $3,000	—
Total	$73,797	$67,397
Rate that matches the job		$60.17 an hour (30% above $46.15)

At $55 an hour the contract falls short by $6,400 a year. The job’s benefits, paid vacation and employer payroll contributions are worth about 20% on top of the salary.

Assumptions

The employee claims only the basic personal amount on the TD1. The contractor claims only business expenses. Neither has other income.
The match and health coverage are counted at face value. The match is really pre-tax retirement savings. The coverage is worth what it would cost you to replace.
Billable weeks default to 52 minus vacation minus two weeks for holidays and gaps. Sick days, training and unpaid downtime can be larger.
Not modelled: incorporating, the personal services business rules, job security, EI eligibility, RRSP room (the contractor’s is based on net business income) and pension vesting.

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.
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, 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 CPP2 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 when a 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 gaps between contracts are all unpaid. Enter more weeks if your contracts run back to back.
Does the calculator include GST/HST?: No, because it is a wash. You add it to 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.
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, incorporating adds $1,500 to $3,000 a year of costs for little benefit.
Could the CRA say I am really an employee?: Yes. If one client controls your hours and tools, and you cannot subcontract or take other clients, the CRA may treat you as an employee, or as a personal services business if incorporated. That removes most of the deductions. RC4110 sets out the tests.

Tax-saving strategies that use this calculator

Incorporating: Salary or Dividends? (2026)The 9% small business rate on the first $500,000, when salary beats dividends, the passive-income grind and the TOSI trap when you pay family.

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