The cost of employing someone in Canada, line by line for a CAD 85,000 Ontario salary

For an Ontario employee whose 2026 gross pay is CAD 85,000, the employer’s outlay is CAD 93,029.25 across the year, which averages CAD 7,752.44 in each month. The CAD 8,029.25 above salary is made up of five statutory items: Canada Pension Plan contributions, the second additional CPP contribution (CPP2), Employment Insurance premiums, the Ontario Employer Health Tax (EHT) and WSIB workers’ compensation premiums.

Under Employer of Record Canada, the monthly EOR fee from USD 560 sits on top. Converted at the European Central Bank rates of 24 September 2026 it is about CAD 790.56 a month, or CAD 9,486.72 a year, which takes the total to CAD 102,515.97 a year, about CAD 8,543.00 a month.

From the same CAD 85,000, the employee receives CAD 63,679.42 a year after deductions, about CAD 5,306.62 a month, or 74.9% of gross. The distance between what the employer pays and what the employee receives, before the fee, is CAD 29,349.83, and most of it is income tax and the employee’s own contributions rather than employer charges.

The figures were calculated twice, once as a single annual calculation bracket by bracket and once across 26 bi-weekly pay periods with the annual contribution ceilings applied cumulatively. The two methods agree to within one cent, and both reproduce the published 2026 CPP and EI maximums.

Every figure in this example rests on the assumptions below, and changing any one of them changes the result. They describe a simple case on purpose, so the statutory lines can be seen clearly.

• Salary of CAD 85,000 for the full calendar year 2026, from one Ontario employer, with no other income and no taxable benefits.
• The employee is an Ontario resident, single, and claims only the basic federal and Ontario personal amounts (claim code 1).
• No RRSP contributions, union dues or other payroll deductions.
• Vacation pay is inside the salary: 2 weeks’ paid vacation, with salary continuing during vacation, so no separate 4% is added.
• Taxable income is CAD 83,873.00, which is CAD 85,000 less the enhanced CPP deduction of CAD 711.00 and the CPP2 contribution of CAD 416.00.
• Ontario EHT at 1.95%, on the assumption that the employer’s Ontario payroll is over CAD 5 million, so no exemption applies.
• WSIB premiums charged at CAD 0.18 for each CAD 100 of insurable earnings, the Class L figure, which fits office-based professional work.
• Tax is the final annual liability; payroll withholding uses the same CRA method and should come out close to it.
• No employer pension, health benefits, EOR fee or currency costs are included in the statutory cost; the fee is shown separately.

Two of these, the EHT rate and the WSIB class, are assumptions about the employer rather than published facts, and section 5 shows how far each can move the total.

Each employer line is a published 2026 rate applied to a defined slice of the salary. The two federal pension lines and EI are capped, while the two Ontario levies are charged on the full salary.

• CPP employer contribution: 5.95% of the CAD 71,100 lying between CAD 3,500 and CAD 74,600, which is CAD 4,230.45, the 2026 maximum.
• CPP2 employer contribution, 4% on earnings between CAD 74,600 and CAD 85,000 (CAD 10,400): CAD 416.00, also the maximum.
• EI employer premium, 1.4 times the employee rate of 1.63% on insurable earnings up to CAD 68,900: CAD 1,572.30.
• Ontario Employer Health Tax at 1.95% of CAD 85,000: CAD 1,657.50.
• WSIB premium for Class L at CAD 0.18 per CAD 100 of CAD 85,000: CAD 153.00.

Together these come to CAD 8,029.25, or 9.45% of salary. The salary of CAD 85,000 happens to sit exactly at the top of the CPP2 band, so this employee pays and attracts the full CPP2 amount; a higher salary would add nothing more to the three federal lines. Employer-side CPP and EI rules are covered in our contributions guide, and the second band in our CPP2 explainer.

The employee’s net pay is CAD 63,679.42 a year, after CAD 21,320.58 of contributions and income tax. The employee pays the same CPP and CPP2 amounts as the employer, but a lower EI premium.

• CPP employee contribution: CAD 4,230.45.
• CPP2 employee contribution: CAD 416.00.
• EI employee premium at 1.63% up to CAD 68,900: CAD 1,123.07.
• Federal income tax: CAD 13,389.97 on the 2026 brackets, less a 14% credit on CAD 22,595.52 of credit amounts (basic personal amount CAD 16,452, Canada employment amount CAD 1,501, base CPP CAD 3,519.45 and EI CAD 1,123.07), giving CAD 10,226.60.
• Ontario basic tax: CAD 5,464.85 on the Ontario brackets, less a 5.05% credit on the Ontario basic personal amount of CAD 12,989 plus the same CPP and EI amounts, giving CAD 4,574.46. It is below the CAD 5,818 surtax threshold, and the Ontario tax reduction is nil at this income.
• Ontario Health Premium: CAD 750.00, the flat amount for taxable income between CAD 72,600 and CAD 200,000.

The monthly equivalent is about CAD 5,306.62. On a bi-weekly payroll the amount per pay changes during the year, because EI stops once its ceiling is reached and CPP stops at its own ceiling, but the annual total matches the figure above.

The two Ontario levies are the least certain lines, because both depend on the employer’s own position rather than on the employee. The CPP, CPP2 and EI figures, by contrast, are fixed by the salary and the published 2026 rates.

The employer’s whole Ontario remuneration fixes the EHT rate, starting at 0.98% for payrolls of CAD 200,000 or less, climbing through stepped rates to CAD 400,000, and reaching 1.95% above that. An eligible employer can shelter CAD 1 million of payroll from the tax, but not when its associated group pays more than CAD 5 million in Ontario. This example assumes a large employer payroll and so no exemption. At the other extreme, a small eligible employer inside the exemption would pay no EHT on this salary, and the employer cost would fall to CAD 91,371.75.

WSIB rates follow the rate class of the business activity. Class L, at CAD 0.18 per CAD 100, is the rate for professional, scientific and technical work. The 2026 average across all classes is CAD 1.23 per CAD 100; at that rate the WSIB line would be CAD 1,045.50 instead of CAD 153.00, and the employer cost CAD 93,921.75. The actual class follows the client’s business activity and the employer’s WSIB account.

Taken one at a time, those two alternatives put the cost for this salary between about CAD 91,400 and about CAD 93,900 before the fee. For budgeting, the central figure of CAD 93,029.25 is a sound starting point for an office-based role.

At from USD 560 per person monthly, the EOR fee is charged as a fixed amount rather than a percentage of salary, so its share of the total falls as pay rises. On CAD 85,000 it adds CAD 9,486.72 a year at the 24 September 2026 conversion, about 10.2% of the CAD 93,029.25 statutory cost. A one-off set-up fee usually sits outside these yearly figures, and your quote gives the amount. The CAD figure will move with exchange rates; the USD figure does not. The conversion divides from USD 560 by the EUR/USD reference rate of 1.1367 and multiplies by the EUR/CAD rate of 1.6047, both published by the ECB for 24 September 2026.

The statutory lines are much the same whichever route you take, because CPP, CPP2 and EI depend on the salary alone. What changes is who holds the registrations and whether the EHT exemption is available. A small corporation of your own might qualify for the exemption, while an employer of record with a large Ontario payroll will not. Against that, your own corporation carries incorporation, directors, bookkeeping and filing work. The full comparison is in our guide to choosing between an EOR and a Canadian subsidiary, and the fee terms are on the pricing page.

The federal lines stay the same in British Columbia and Alberta, but the provincial levies and income tax differ, and Quebec replaces several lines entirely. British Columbia’s Employer Health Tax does not apply to employers with BC remuneration of CAD 1 million or less, and the 2026 WorkSafeBC average base rate is CAD 1.55 per CAD 100. In Alberta, the 2026 average WCB rate is CAD 1.46 per CAD 100. Income tax differs too: the first provincial band is 8% up to CAD 61,200 in Alberta and 5.6% up to CAD 50,363 in British Columbia, against 5.05% up to CAD 53,891 in Ontario, so the same salary produces a different net figure in each.

In Quebec, the Quebec Pension Plan replaces CPP at 6.30% each side, with a maximum of CAD 4,479.30 each side against CPP’s CAD 4,230.45. The employer also pays the Québec Parental Insurance Plan at 0.602% up to CAD 103,000, a lower EI rate of CAD 1.82 per CAD 100, and a Health Services Fund charge set somewhere from 1.65% to 4.26%, as set out in Revenu Québec’s 2026 summary. A Quebec version of this example would need its own calculation.

Several real costs sit outside the statutory figure. Employer pension or RRSP matching, health and dental benefits, equipment, and any extra vacation or bonus are all additional. So is the cost of ending employment, where statutory notice is set by the provincial employment standards and there is a risk of higher common-law reasonable notice unless the contract’s termination clause caps it in a way that holds up.