Am I a T4 employee or a self-employed contractor? (Canada)

Last updated: August 19, 2026

Applies to: workers in Canada. In the US? See Am I a W-2 employee or an Independent Contractor (1099)? (US)

Summary: In Canada you're either an employee (a "contract of service" — taxes, CPP, and EI are withheld and you get a T4) or a self-employed contractor (a "contract for service" — you invoice, handle your own taxes, and don't receive a T4 from a payer). The CRA decides based on the whole relationship — control, tools, subcontracting, financial risk, investment, and profit opportunity — not on what the contract calls you.

Employee (T4)

If you're employed through Ascen in Canada, Ascen is your employer:

  • Income tax, CPP, and EI are withheld from each pay, based on your TD1.

  • Your employer contributes its share of CPP and EI.

  • You're covered by employment standards (minimum wage, overtime, vacation, statutory holidays) for your province of work.

  • Year-end form: T4 (plus a Relevé 1 in Quebec).

Self-employed contractor

  • Nothing is withheld — you're responsible for your own income tax and both sides of CPP contributions, and you generally don't have EI coverage.

  • You run your own business: your own tools, expenses, ability to take other clients or subcontract, and the chance of profit or loss.

  • No T4 from the payer — you report business income on your return.

How classification is actually decided

The Canada Revenue Agency looks at the total relationship, using factors such as:

  1. Control — does the payer direct how and what work is done?

  2. Ownership of tools — who provides the equipment?

  3. Subcontracting — can you hire others to do the work?

  4. Financial risk — do you carry unreimbursed costs?

  5. Investment and management — do you run a business behind the work?

  6. Opportunity for profit — can you profit or lose, beyond a fixed wage?

Quebec applies its own similar test (Revenu Québec), with emphasis on subordination — whether the payer holds authority over how you work.

Why it matters

Misclassification is costly for everyone — back taxes, CPP/EI assessments, and lost protections. If you believe your classification doesn't match how you actually work, email Ascen at support@ascen.com. Ascen determines worker classification, so this goes to us rather than to your staffing partner.

  • Am I an employee or an independent contractor? (all countries)

  • How do I fill out my Canadian tax forms (TD1)?

  • When will I get my T4 (and Relevé 1 in Quebec)?

This isn't individual tax or legal advice — for your situation, consult a professional or the CRA / Revenu Québec.