Canada - Tax Guide for Freelance Contractors
Welcome to our guide to Canadian Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, Canada.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in Canada. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in Canada.
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Social security
Residents and non-residents
- working in Canada are required to pay social security contributions on their gross salary in Canada or in the country of their employer if a social security agreement allows a detachment.
Social security rates for 2010:
Canada pension plan: employer and employee pay 4.95% each on eligible earnings between CDN$ 3’500 to CDN$ 47’200 per year. The maximum contribution for each is CDN 2’163.15. The province of Quebec has a separate but similar pension plan.
Employment insurance: employees pay 1.73% on earnings up to CDN$ 43’200. The maximum contribution per year is CDN$ 747.36. Employers’ contributions are 1.4 times the employees’ contributions, i.e. 2.422%. Their maximum contributions are CDN$ 1’046.30 per employee per year.
Medical insurance: each province administers a general health insurance plan. In most provinces, residents have to pay monthly premiums. Employers collect and remit the premiums for their employees.
Workers’ compensation: each province administers an accident fund. Depending on the industry, membership may be compulsory or voluntary for employers. Rates payable by employer per employee vary by province and by industry.