Contractor vs. Employee True Cost Comparator

A contractor invoice looks cheaper than a fully-loaded salary right up until CRA decides the relationship actually looked like employment all along.

Reading This Tool

How To Use This Calculator

Enter what each option would actually cost, plus your honest estimate of reclassification risk on the contractor side.

An employee's fully-loaded cost includes CPP, EI, benefits and overhead on top of salary. A contractor's headline rate looks lower, but if the working relationship resembles employment in substance, control, integration, ongoing exclusivity, that risk has a real expected cost too.

Your Inputs

Annual Contractor Cost $95,000

Equivalent Employee Salary $80,000

Annual Employee Benefits Cost $8,000

Employee Overhead (Equipment, Space, Admin) $6,000

Estimated Chance Of CRA Reclassification 5%

Estimated Cost If Reclassified (Back Taxes, Penalties) $25,000

Reclassification risk rises sharply with exclusivity, ongoing control over how and when work is done, use of company equipment, and long, indefinite engagements, versus a contractor who sets their own hours, uses their own tools, and serves multiple clients.

True Annual Cost

Employee, Fully Loaded

Contractor, Risk-Adjusted

Difference

Employee Cost Stack vs. Contractor Cost

Base Pay / Contract Value Employer Costs / Risk-Adjusted Exposure

CRA looks at the actual substance of the working relationship, not the label in the contract, control, ownership of tools, chance of profit or risk of loss, and integration into the business are the classic tests. A written contract calling someone a contractor carries little weight on its own if the relationship functions like employment.

Not sure which side of the line a role actually falls on?

Read The Full Reclassification Guide →