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Subcontractor taxes in Canada work like any self-employed income. You report your net business income on your own return, you pay both halves of CPP, and you have to register for GST/HST once your sales pass $30,000. No one takes tax off your invoices, so the bill lands on you at filing time.
Are you really a subcontractor?
The label on the contract doesn’t decide it. The CRA looks at how the work actually happens. Signs of an employee include a payer who sets your hours, directs how you work, expects you to do the job yourself and is your only client. Signs of self-employment include choosing when and for whom you work, using your own tools, hiring helpers and carrying a risk of loss.
If you and the payer disagree, either side can ask the CRA for a CPP/EI ruling. That’s better than guessing, because getting it wrong changes who owes what.
How much tax does a subcontractor pay on $80,000?
Enter $80,000 of net business income for Ontario in the self-employed tax calculator. Net means after business expenses. Income tax comes to $13,233.57 and CPP on both halves is $8,892.90. That’s $22,126.47 together, leaving $57,873.53.
On $50,000 net, income tax is $5,961.64 and CPP is $5,533.50, a total of $11,495.14. Notice that CPP is nearly as big as the income tax at that level. Employees only see half of it on their pay stub, which is why a subcontractor’s first tax bill feels so much heavier than the same income earned on a T4.
| Net business income, Ontario | Income tax | CPP, both halves | Left |
|---|---|---|---|
| $50,000 | $5,961.64 | $5,533.50 | $38,504.86 |
| $80,000 | $13,233.57 | $8,892.90 | $57,873.53 |
These leave out GST/HST, EI and your expenses. Use the tax refund calculator if you also had a job with tax withheld.
What does this look like for a real tradesperson?
Take Sam, a drywall subcontractor in Edmonton who used to be on a crew’s payroll. His old paycheque had tax, CPP and EI taken off before it ever reached him. Now each invoice pays in full, and the cash feels like a raise. It isn’t. The taxman still gets paid, just later and in one lump unless Sam sets money aside or pays instalments. If Sam clears $80,000 after expenses, roughly $22,100 of it is spoken for before he buys a thing, using the Ontario example above as a ballpark since Alberta differs in the details.
When do you need to register for GST/HST?
Once your revenue from taxable sales is over $30,000 in a single calendar quarter or over the last four quarters in a row. You then have 29 days to register. Below that you’re a small supplier and don’t have to charge GST/HST.
Watch the running total, not the calendar year. A large invoice in one quarter can push you over. Our guide to GST, HST and PST explains how the tax works once you’re registered.
What are the deadlines for subcontractors?
For the 2025 return, the filing date for the self-employed was 15 June 2026, but any tax owing was due on 30 April 2026. The 2026 dates haven’t been published yet.
You may also owe instalments. The CRA asks for them when your net tax owing is over $3,000 in the current year and in either of the two years before. The payment dates for 2026 are 15 March, 15 June, 15 September and 15 December. Our tax instalments calculator splits the year into four equal payments.
Mistakes that hurt subcontractors
Spending the whole invoice. Set aside a share for tax as each payment arrives. On $80,000 in our example about 28 cents of each dollar goes to tax and CPP.
Claiming an expense with no receipt. Keep them all. Our self-employed expenses checklist shows what people commonly track.
Missing the GST/HST line, since the registration clock runs by quarter. And treating a subcontract as a job when you actually run a business, which changes your CPP and your deductions. If you work from a spare room, read about home office deductions before you claim a share of the house.
The sources behind this page
The rules come from the Canada Revenue Agency: its guidance on employee or self-employed status, GST/HST small supplier rules, CPP on self-employed earnings and income tax instalments. The examples use our 2026 federal and Ontario rates. We haven’t confirmed late penalties, so none are stated here.
Frequently asked questions
Do subcontractors pay tax on every invoice?
No tax is taken off your invoices. You report net business income on your return and pay the tax at filing, or through instalments if you owe over $3,000.
Do subcontractors pay both halves of CPP?
Yes. Self-employed workers pay the employee and employer portions of CPP when they file, using Schedule 8.
When must a subcontractor register for GST/HST?
When revenue from taxable sales passes $30,000 in one calendar quarter or over four quarters in a row. Registration is due within 29 days.
How do I know if I'm an employee or a subcontractor?
The CRA looks at control, tools, the chance of profit or loss and whether you can hire helpers. You or the payer can request a CPP/EI ruling.
When is a subcontractor's tax return due?
For the 2025 return, 15 June 2026 to file and 30 April 2026 to pay. The 2026 dates aren't published yet.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST