What Self-Employment Costs a Newcomer, Versus a Salary
What self-employment costs a newcomer versus a salary doesn’t show up in week one. It shows up in instalments, usually starting around month two, once the first invoices are in and the first real bills come due.
Month two: the CPP remittance
Say yes to a salaried offer and your employer matches your Canada Pension Plan contribution dollar for dollar — as at 2026, that’s up to $4,646.45 from you and the same again from them once your income clears the basic exemption (check CRA’s current contribution limits before you budget, since the figure moves most years). Go self-employed and there’s no other side of that transaction. You’re both halves. The number on your first CRA instalment is money an employer would otherwise have absorbed without you ever seeing it move.
What benefits do you lose when you’re self-employed?
Three matter most, and they compound.
Health and dental. Canada’s provincial plans cover medically necessary physician and hospital care. Prescription drugs outside hospital sit outside that entirely, along with dental, vision and physiotherapy. Most working Canadians never notice the gap because an employer’s extended health benefits plan covers it. The question to price, then: how much does private health and dental cover cost in Canada if you have to buy it yourself? There’s no single published figure — it varies by age, province and provider — so get two quotes before you price a contract, and treat that number as a fixed monthly line for as long as you’re self-employed.
Vacation. The statutory floor for an employee is two weeks of paid leave a year in most provinces, and negotiating three or four at offer stage is a common, valuable ask for a newcomer. Ask yourself: do self-employed Canadians get paid vacation or sick leave? No. Every day you don’t work is a day you don’t invoice.
The employer’s other half. CPP is the visible one, but it’s really a stand-in for a wider pattern: what does an employer pay on top of your salary in Canada that you’d otherwise be paying alone? Pension matching. Statutory leave. Usually a benefits plan too — separate costs an employer absorbs that a self-employed contractor covers out of the same day rate, one invisible line at a time.
Pricing it before you sign anything
None of this makes self-employment the wrong call — for plenty of people, especially where the day rate is genuinely strong, it’s the better call. The honest comparison is never salary versus day rate on its own. It’s salary versus day rate, minus CPP’s employer half, minus a private health plan, minus however many weeks you actually take unpaid. A contract that looks 20% richer on paper can quietly be worse once those three lines come off it.
That leaves one number to work out: how much more must you earn to replace employee benefits? Enough to cover all of the above — then decide whether the rate on offer clears that bar before you sign anything.
If you’re weighing a Canadian contract against a South African one, add exchange-rate movement to the list: an invoiced income swings with the rand-CAD rate in a way a fixed salary simply doesn’t. That’s worth a conversation with an accountant on both sides before you decide.
Before you accept either offer, write out what an employer would actually be paying on top of your salary — then price the self-employed version of the same year against it, line by line. That maths is yours to run; Cape2Canada’s free guides cover the immigration side of either path.