As a self-employed person, you pay both the employee and employer portions of CPP — 11.9% instead of the 5.95% an employee pays. An employee's employer covers the other half. When you're self-employed, you are both the employee and the employer, so you cover both sides. This is one of the main reasons your total tax and contribution obligation is significantly higher than a T4 employee earning the same amount.
CPP is calculated on your net self-employment income — your gross revenue minus deductible business expenses. This is different from T4 employees, whose CPP is calculated on gross employment earnings before deductions. If you have significant business expenses, your CPP obligation will be lower than 11.9% of your gross revenue.
CPP2 (Second Additional CPP) is a second tier of CPP contributions introduced as part of the CPP enhancement. It applies to earnings between the Year's Maximum Pensionable Earnings (YMPE, $74,600 in 2026) and the Year's Additional Maximum Pensionable Earnings (YAMPE, $85,000 in 2026). The self-employed CPP2 rate is 8% (both sides), with a maximum contribution of $832.00. If your net self-employment income is below $74,600, CPP2 does not apply and shows as $0.00 in your results.
Ontario applies a surtax on top of basic provincial tax for higher earners. If your basic Ontario tax exceeds $5,818, a 20% surtax applies to the amount over $5,818. If your basic Ontario tax exceeds $7,446, an additional 36% surtax applies to the amount over $7,446. Both layers are additive. The surtax is calculated on Ontario basic tax, not on your total income.
The Ontario Health Premium (OHP) is an annual levy of up to $900 based on your taxable income. It applies to Ontario residents with taxable income above $20,000. The premium increases progressively across income tiers: $0 for income up to $20,000, then gradually increasing to a maximum of $900 for income over $200,000. The OHP is separate from income tax and is not reduced by the Ontario tax reduction.
No. EI premiums are not automatically required for self-employed individuals. The CRA offers an optional Self-Employed EI Special Benefits Program that covers maternity, parental, sickness, compassionate care, and family caregiver benefits — but regular EI benefits are not available through this program. This calculator does not include EI in its default calculations. If you've opted into the self-employed EI program, you'll need to account for those premiums separately.
You must register for GST/HST when your gross revenue exceeds $30,000 over four consecutive calendar quarters. This calculator provides a reminder when your gross revenue approaches or exceeds that threshold. HST is not included in the tax estimate — it's collected separately and remitted to the CRA on behalf of your customers.
If your net tax owing exceeds $3,000 in the current year and exceeded $3,000 in either of the two prior years, CRA may require you to pay income tax by quarterly installments. Installment due dates are March 15, June 15, September 15, and December 15. This calculator provides an informational reminder about installments but does not calculate installment amounts. Consult the CRA or a tax professional for your specific installment obligations.
An RRSP contribution reduces your taxable income, which in turn reduces your federal and Ontario income tax, Ontario surtax, and Ontario Health Premium. It does not reduce your CPP or CPP2 contributions — those are calculated on net self-employment income before the RRSP deduction. This calculator does not estimate your RRSP contribution room; you'll need to verify that separately on your CRA Notice of Assessment.
No. This calculator is designed for unincorporated sole proprietors and self-employed individuals who file a T2125. Incorporated businesses are subject to corporate tax rates, different CPP treatment (salary vs. dividends), and different filing requirements. Consult an accountant for advice specific to your corporate structure.
The CPP deduction on your tax return uses a specific formula that accounts for the enhanced CPP contributions. The base CPP1 employee portion (4.95%) generates a non-refundable tax credit at Line 31000, while the employer base (4.95%) and all enhanced portions are deductible at Line 22200 and Line 22215. This means your total deduction from CPP1 is 6.95% of pensionable earnings (not a simple 50/50 split), plus CPP2 which is 100% deductible. This is confirmed by the CRA CPP Enhancement page.