Canadian Contractor Rate Calculator
Find the gross hourly rate you need to replace salary, benefits, employer payroll costs and business expenses.
Work from home. Don’t put your home address on the public record.
Use a downtown Toronto business address for eligible registered-office use, with mail received and handled online, for $45/month.
Get your business addressWhat this rate means
The result is a compensation-equivalence starting point. It does not add an arbitrary “contractor premium.” Market demand, contract risk and profit targets are commercial decisions you should price separately.
Employees generally have employer-paid CPP and EI, paid time away from work and benefits. Contractors must recover those costs over fewer billable hours. Sole proprietors pay both portions of CPP; incorporated contractors can have different results depending on salary, dividends and whether the corporation is considered a personal services business.
Frequently asked questions
How much should I charge as a contractor to match my salary?
Most contractors need to bill roughly 1.5 to 2 times their equivalent hourly salary rate to keep the same take-home pay, because they cover lost benefits, both portions of CPP, business expenses and unpaid time off. This calculator replaces the rule of thumb with a break-even rate based on your own numbers.
Should I charge more than the calculated rate?
Usually, yes. The result is a break-even estimate that maintains your current compensation. Most contractors add a margin for market demand, experience, the risk of gaps between contracts and funds to grow the business — often 10–30% or more.
How do billable hours change my rate?
A standard work year is 2,080 hours, but after vacation, statutory holidays, sick days and non-billable work such as marketing and administration, many contractors bill closer to 1,400–1,700 hours. Fewer billable hours mean each hour must recover more of your annual costs, so the required rate rises.
Does the calculator decide between sole proprietorship and incorporation?
No. It compares pre-income-tax compensation, which applies either way. Incorporation changes tax planning, liability and administration costs, and a corporation serving mainly one client can be treated as a personal services business with limited deductions.
Methodology and sources
- Last verified
- July 12, 2026
- Scope
- Canada outside Quebec; pre-income-tax employee-to-contractor compensation comparison using 2026 CPP, CPP2 and EI limits.
- Limitations
- Does not determine worker status, PSB status, income tax, workers’ compensation, sales tax, market pricing or the legal minimum vacation and holiday rules for a particular engagement.
Primary sources
Related Articles and Resources
Sole Proprietorship vs Incorporation
Compare business structures for contractors, including tax implications, liability protection, and administrative requirements.
Ontario Business Owner Tax Guide
Complete tax guide for Ontario business owners, including corporate tax rates, provincial considerations, and tax planning strategies.
Ribbon Business Updates
Latest articles on Canadian business incorporation, contractor management, and business optimization strategies.
Non-Resident Business Bank Account
Guide for non-residents setting up business bank accounts in Canada, including requirements and considerations.