Staffing Agency (T4) vs Incorporated Take-Home Calculator
Model take-home pay as a staffing-agency T4 employee versus an incorporated contractor through the same agency, including CPP2, HST and PSB risk.
Estimated net annual take-home
$45,692
Gross contract value$60,000
Umbrella margin fee deducted$1,800
Income after umbrella fee$58,200
Income tax$8,305
CPP (Canada Pension Plan — employee)$3,255
CPP (employer)$3,255
EI (Employment Insurance — employee)$949
EI (employer, 1.4x employee rate)$1,328
Total deductions$12,508
Effective tax rate21.5%
T4 through an agency or incorporated on the same contract: what changes
On many Canadian contracts, especially through staffing agencies and IT placements, you're offered a choice between being paid as a T4 employee of the agency or invoicing through your own corporation. The two paths carry very different tax and CPP consequences on the same underlying contract.
What changes between agency T4 and incorporated on the same contract
- As a T4 agency employee, CPP and CPP2 are split with the agency, which typically prices its employer-side cost into a lower headline rate; as incorporated, you cover both sides yourself but keep the full contract value before tax
- Incorporated income may qualify for the lower small-business corporate rate if left in the corporation, though this is exactly the setup the CRA's Personal Services Business rules are designed to catch on a single ongoing agency placement
- GST/HST registration and remittance become your responsibility once incorporated and past the $30,000 threshold, where an agency handles no such obligation for a T4 placement
