Gone through IT - Contractor Charcha , still have some questions

Working as IT contractor , getting paid by Agency with Vacation pay, stat pay and EI/CPP/Income tax deduction.

Wants know which way its more beneficial in terms of saving more money then paying as tax !

I guess if i go as Inc. (term used by agency) then i will get 10-15% pay on what i am getting as employee. So i have calculated that 10-15%

My Calculation
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4% Vacation
4% CPP (which now i have to pay as employer)
1% (approx) Stat Pay

so end of the year total income will be increased by 10% out of which i have to pay 4% toward My cpp (calculating 4%, either way i am already paying 4%)

As Employee as INc.

25/hr * 2000Hrs(year) = 50000$ 27.5 * 2000hrs = 55000
+4% vacation pay = 2000$ less 4% Vacation 2000
+4% cpp paid by employer = 2000$* less 4% cpp 2000 *

*cpp i believe 4% is deducted from employee and 4% paid by employer to cpp account (please correct here if i am wrong)

not calculating EI, as per new rule self employed person can still contribute for EI

so $ wise its same as above

Now i need advice on, what are the real advantages, in terms of saving money. I believe if i am incorporated i will be able claim expenses and so saving money on taxes which i am paying now as employee.


Based on above figure and spouse income 20k with 2 kids , income tax return i am getting is almost none.

1 what is total cost of getting registered ?
2 how much paper work i have do ? (willing to do all )
3 how much i have to pay to account ?
4 would i be able to save good amount ? (compare to none)
5 what if i get another job which is not contract or through agency

Hi ,
Your post is not very clear. There are definite advantage of working as Contractor. You can write off your expense. Getting a Accountant for Incorporating & other accounting stuff will cost you around 700 CAD. If your children are small & your wife is in low income bracket of 20,000 , you can get lot of benefit by Incorporating & paying you less. In my estimates , total you can save around 8-10 K every year in Taxes by incorporating.

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Driller the thriller

Incorporating yourself online takes about 1-2 hrs.... Minimal paperwork.... If you take a numbered corporation then you get registered the same day..... You will most certainly save a lot more if you incorporate..... Plus that makes you more employable in IT.... Since nobody prefers to hire employees due to the added responsibilities.....

All the best...

In addition to other benefits, if you use 25% of your home for your office/work activities, you can claim equivalent portion of your mortgage and utilities. This is a real bonus. I know some professionals/contractor/accountants who have their home office, usually buy big houses and claim a part of mortgage and utilities as expense.

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A Delhite in Toronto

Thank a lot to ALL

I think, being a self-employee seems like a good arrangement for all. When you are self-employed you are in complete control. You may set your own schedule, procedures and rules. Any profit or bonus you make is yours to keep.

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