Most “$80K salary vs $80K contract” posts ignore that **CPP alone** can add thousands when you switch to Schedule T2125. This page uses Ontario as the default provincial stack; swap inputs to stress-test your province and business deductions.
Worked example at $80,000 CAD
On $80,000 T4 in this simplified Ontario model, cash after federal tax, provincial tax, CPP, and EI often lands near ~$58,000–$60,000 depending on credits and TD1 choices—not the full $80K.
The same $80,000 self-employment revenue (before HST) with $8,000 expenses and double CPP frequently ends closer to ~$51,000–$54,000 net unless you raise gross or cut costs.
HST at 13% is collected *on top* of your price once you cross typical small-supplier thresholds—it is not “extra salary.”
Why the employee column looks richer
Employers remit payroll withholding and match CPP/EI within the T4 system. As a sole proprietor you still owe the full CPP on pensionable earnings (within YMPE and the basic exemption) and you do not automatically get EI unless you participate in the self-employed program.
What we do not model (yet)
RRSP/PHSP, dividend-only corporations, and province-specific surtaxes are out of scope. Use the output as a directional comparison, then confirm with an accountant before you incorporate or change provinces.
Worked example: C$80,000 salary — what you keep
A C$80,000 T4 in an Ontario-style stack often nets ~C$58,500 after federal tax (~C$11,200), provincial tax (~C$4,800), employee CPP (~C$3,900), and EI (~C$1,000) in rounded models. The employer also pays matching CPP and EI plus benefits—~C$8,500–10,000 hidden load. A sole proprietor with C$80,000 revenue, C$8,000 expenses, and employee-equivalent CPP (both portions) frequently lands ~C$52,000–C$54,000 net before voluntary retirement—C$4k–C$8k behind the employee on the same headline number.
| Item | T4 employee (C$80k) | Sole prop (C$80k rev) |
|---|---|---|
| Gross / revenue | C$80,000 | C$80,000 |
| Business expenses | — | −C$8,000 |
| Federal tax | −C$11,200 | −C$9,800 |
| Provincial tax (ON-style) | −C$4,800 | −C$4,200 |
| CPP (employee / both portions) | −C$3,900 | −C$7,800 |
| EI | −C$1,000 | C$0 (unless opted-in) |
| ≈ Net cash | ≈ C$58,500 | ≈ C$53,000 |
**HST/GST** is usually pass-through once registered; cross the **C$30k** small-supplier threshold carefully. Québec has a parallel QST flow—verify Revenu Québec rules.
Common mistakes when comparing Canadian net pay
Forgetting double CPP
Self-employed pay both employee and employer CPP portions (within YMPE and exemptions). On many incomes that is ~C$3,800–C$4,000 extra versus the T4 line.
Treating contract revenue like salary
C$80k on a T4 includes paid vacation and stat holidays baked into payroll. C$80k invoiced with 10–15% bench and admin is not the same runway.
Ignoring EI choice
Employees pay EI automatically. Self-employed EI is optional—without it, you lose a safety net you priced as “free.”
Mixing HST into your “salary”
Collect 13% HST (ON) on fees, remit net of ITCs—do not mentally add HST to personal income.
Who benefits most from freelancing in Canada?
When self-employment tends to win
Contracting pays when:
- Your **day rate** clears **C$650–800+** in major metros (tech, finance, specialized PM).
- You stay **>80% utilized** with low receivables risk.
- You can expense **legitimate** gear, home office, and professional dues.
- You operate in a province with **predictable** personal tax you model explicitly.
When T4 is safer
Employment wins when:
- Rates imply **<C$500/day** equivalent after downtime.
- You need **EI**, parental top-ups, or strong **group benefits**.
- You hate **GST/HST admin** and late-filing penalties.
- You plan to buy a home soon—some lenders prefer stable T4 history.
FAQ
No—it's the default bracket set in the JSON. VERIFY provincial rows against your CRA/Revenu Québec flow if you are outside ON or QC.
Usually it is a pass-through if you are registered; pricing must separate taxable fees from remittances.
Not explicitly—use your notice of assessment to plan deductions.
CCPC tax and salary/dividend splits are not modeled here; talk to a CPA.
Often **C$95k–C$115k+** gross invoiced depending on expenses, CPP, and province.
Use QC-specific data in your build if present; otherwise treat numbers as indicative only.
Only simplifications—Canada workers benefit and other credits may change net.
Yes—enter partial-year revenue; fixed costs still bite smaller bases.