How far back can the CRA go on a misclassification reassessment?

There's no hard statutory ceiling on how far back the CRA can reassess payroll remittances, though six years is a practical reference point tied to the mandatory payroll-record retention period under the CRA's Employers' Guide — larger or older exposures are possible, particularly where gross negligence is found.

What interest rate applies to unpaid CPP and EI?

The CRA's prescribed interest rate on overdue amounts is 7% per year, confirmed unchanged through the first three quarters of 2026, and it compounds daily rather than simply accruing at a flat annual rate.

Is the failure-to-remit penalty a fixed dollar amount?

No — it's a percentage of the amount that should have been remitted: 3% if the remittance was 1-3 days late, rising to 10% for more than 7 days late or where nothing was ever remitted, and up to 20% where the failure was made knowingly or through gross negligence, including on repeat failures.

Does the employer or the worker end up owing the money?

The employer is generally on the hook first — the CRA can, and typically does, collect the employee's share of CPP and EI from the employer even if it was never withheld from the worker's pay, on top of the employer's own share. Separately, an incorporated worker reassessed as running a Personal Services Business faces their own corporate-level exposure — see our PSB risk and cost calculator.

CRA Worker Misclassification Back-Tax Calculator

Estimate the CPP/EI arrears, failure-to-remit penalties and prescribed-rate interest if the CRA reclassifies a contractor as an employee, for payers and workers.

Annual gross income (as self-employed)

If the CRA (via a CPP/EI ruling under ITA/EIA authority) or a court reclassifies a worker as an employee, the payer becomes liable for both the employer's AND the employee's share of unremitted CPP and EI (CRA can, and typically does, still collect the employee's share from the employer if it wasn't withheld), plus a failure-to-remit penalty that is PERCENTAGE-based (3% if 1-3 days late, rising to 10% for more than 7 days late or where no amount was ever remitted, and up to 20% for a second/repeated failure made knowingly or under gross negligence) — this is NOT a flat dollar fine, so it is deliberately NOT encoded in fixedPenalty (no accurate flat-fee primitive exists for it) and should be modelled as a percentage of the retroactive CPP+EI liability in the UI. Arrears interest is compound daily at the CRA prescribed rate for overdue amounts, which is unchanged at 7% p.a. through Q3 2026 (confirmed 2026-07-30) — modelled here as penaltyRatePerMonth = 7%/12 = 0.5833%/month. lookbackYears=6 is a PRACTICAL figure (the mandatory payroll-record retention period under the Employers' Guide, T4001), not a fixed statutory limitation period — CRA has no hard cap on how far back it can reassess payroll remittances, and larger/older exposures are possible, especially for gross negligence. Separately, on the WORKER's side, an incorporated contractor union-of-facts reclassified as running a Personal Services Business (see statusRegime.fields' PSB rate constants) faces its own separate corporate-level exposure (loss of the small-business deduction, denial of most expenses, +5% federal surtax) — that is a distinct mechanism from this employer-side CPP/EI arrears calculation and is cross-referenced for calculator id1 (contractor-status-cost) and id17 (company-profit-dividend).

Total exposure if reclassified

$17,041

Shortfall per year$2,347

Lookback period6 years

Total shortfall$14,083

Penalty$2,957

What a CRA reclassification bill looks like for the payer and the worker

If the CRA — through a CPP/EI ruling or a court decision — reclassifies a worker you treated as a contractor as an employee, the bill isn't limited to future payroll changes. The CRA can typically still collect both the employer's and the employee's share of unremitted CPP and EI going back through prior years, plus a penalty and daily-compounding arrears interest, even where nothing was withheld at the time because everyone genuinely believed the arrangement was a contractor relationship.

This calculator estimates that exposure for 2026: retroactive CPP and EI on both sides, a failure-to-remit penalty that scales with how late and how often it happens, from 3% for a short delay up to 20% for gross negligence, and interest at the CRA's prescribed rate, currently 7% per year and unchanged since the start of 2026. It also flags the worker's own separate exposure if their corporation is found to be a Personal Services Business.

How this exposure is estimated

Enter the retroactive period in dispute and the amounts paid to the worker over that time.
The calculator applies both-sides CPP (5.95% plus CPP2's 4%) and EI (1.63% employee-equivalent plus 2.282% employer) as if the worker had been on payroll throughout.
A failure-to-remit penalty is added — 3% at the low end, rising with the lateness and whether it's a repeat or knowing failure.
Daily-compounding arrears interest is applied at the CRA's current prescribed rate of 7% per year.