Independent contractor agreement
Set clear terms for hiring a contractor rather than an employee.
An independent contractor agreement sets the terms between a business and a self-employed worker, and states that the worker is not an employee. The label only holds up if the working relationship matches it, so this page also covers the factors the Canada Revenue Agency and US agencies look at.
Opens a fillable version in your browser. Free, no account, nothing uploaded.
Fields in this form
- Effective date
- Client name
- Contractor name
- Scope of work
- Payment terms
- Project timeline
- Ownership of work
- Termination terms
- Client signature
- Contractor signature
About the independent contractor agreement
An independent contractor agreement sets out the terms between a business and a contractor. It covers the work, the payment, the timeline, and the fact that the contractor is not an employee.
This fillable template gives you a clear starting point you can complete, sign, and keep as a PDF.
When you need it
- Hiring a freelancer or contractor for a project.
- You want the scope, pay, and status in writing.
- You need to show the working relationship is contract based.
Where it stands legally
Canada: the Canada Revenue Agency decides employee or self-employed status by looking at the whole relationship, not the contract's title. Its guide RC4110 starts with what the parties intended and then tests that intent against control (the payer's right to direct how the work is done), who supplies tools and equipment, whether the worker can subcontract or hire helpers, financial risk, responsibility for investment and management, and the chance of profit or risk of loss. Employees normally have no chance of profit and no risk of loss. Get status wrong and the payer can owe CPP, EI and penalties.
Provinces add their own tests under employment standards and workers' compensation law, and Ontario's Employment Standards Act prohibits treating an employee as if they were not one.
United States: the IRS uses a similar common-law test (behavioural control, financial control, relationship), and several states use a stricter ABC test. A contractor who is really an employee triggers payroll tax, overtime and benefit obligations.
The agreement should support real contractor status: the contractor sets their own hours and methods, uses their own tools, can take other clients, invoices for the work, and bears some risk. Writing those things down and then behaving differently does not help.
General information, not legal advice. Rules differ by province, state and city, and they change. Confirm the current rule where the document will be used.
What each field means and how to fill it
| Field | What it means | How to fill it |
|---|---|---|
| Effective date | Start of the engagement. | The signing date or the first day of work. |
| Client name | The business hiring the contractor. | Legal name and address. |
| Contractor name | The self-employed person or their company. | Use the contractor's business name if they have one, and their GST/HST number if registered. |
| Scope of work | Deliverables and results, not hours and supervision. | Describe outcomes. Avoid language about reporting to a manager or fixed shifts, which points to employment. |
| Payment terms | How the contractor is paid. | Fixed fee, milestones or hourly rate, invoiced by the contractor, with payment due days after invoice. No payroll deductions. |
| Project timeline | Start, milestones, end. | Dates or working days. Say the contractor controls how and when the work gets done within the deadlines. |
| Ownership of work | Who owns the deliverables and any IP. | In Canada a contractor owns copyright in their work unless assigned in writing, so say clearly that ownership transfers to the client on payment if that is the deal, and that moral rights are waived if you need that. |
| Termination terms | How either side ends it. | Notice period, payment for work done, return of materials, and immediate ending for breach. |
| Signatures | Both agree. | Both sign and date; each keeps a copy. |
How to fill this out
- 1Confirm the relationship really is contractor work using the CRA or IRS factors before you use this document.
- 2Enter the effective date, the client and the contractor's business details.
- 3Describe the scope as deliverables and results, with the contractor controlling how the work is done.
- 4Set the fee or rate, invoicing and payment timing, and note the contractor is responsible for their own taxes.
- 5State who owns the work and any IP, and how the agreement can end.
- 6Both sign, download the PDF, and keep copies with the contractor's invoices.
Common mistakes to avoid
- Calling someone a contractor while setting their hours, supervising them daily and supplying their equipment.
- Paying a contractor through payroll or reimbursing all expenses, which looks like employment.
- No IP assignment, so the client does not own the code, designs or writing it paid for.
- An exclusive, indefinite, full-time engagement with one client, which is hard to defend as contracting.
- Skipping the termination clause.
- Not asking the contractor for a tax registration number where they charge sales tax.
What makes it hold up, and when you need a lawyer
Usually fine with this template
- Project-based work with a self-employed professional who has other clients and their own tools.
- Specialist services with clear deliverables: development, design, consulting, trades, bookkeeping.
- Short engagements where the contractor invoices and manages their own taxes.
Use the official form or get advice
- Long-term, full-time or exclusive arrangements, or converting an employee to a contractor.
- Work where you must own patents, trade secrets or software outright.
- Contractors working in regulated fields, with your customers' personal data, or in another country.
- Any doubt about status. A CRA ruling request (form CPT1) or a lawyer's opinion costs far less than a reassessment.
Worked example (illustrative)
Made-up names and figures to show what a completed independent contractor agreement looks like. Not a real transaction.
| Independent contractor agreement, illustrative | |
|---|---|
| Effective date | October 1, 2026 |
| Client | Cedar Software Inc. |
| Contractor | Moreau Dev Services (sole proprietor), GST/HST registered |
| Scope | Build and document a payment integration to the specification attached. Contractor chooses methods, hours and tools. |
| Payment | $9,000.00 fixed fee: 30% on signing, 40% on test acceptance, 30% on delivery. Contractor invoices; due net 15. Contractor responsible for own taxes. |
| Timeline | Delivery within 8 weeks of the effective date |
| Ownership | All deliverables and IP assigned to client on final payment; contractor keeps pre-existing tools and libraries under licence |
| Termination | Either party on 10 days written notice; client pays for milestones completed |
Related official forms, tools and guides
- Independent contractor agreement guide
- Contract template: simpler services contract
- NDA template
- Invoice template: contractors bill with invoices, not timesheets on payroll
- Form 1099-NEC (US): how US clients report contractor payments
- Form W-9 (US): US contractors give clients their TIN with this
- Employment offer letter: if the role is really a job
Frequently asked questions
How is a contractor different from an employee?
The CRA looks at the whole relationship: who controls how the work is done, who supplies tools, whether the worker can subcontract, financial risk, investment, and the chance of profit or loss. A contractor runs their own business; an employee works under the payer's direction. The label in the contract is only the starting point. This template is not legal or tax advice.
Who owns the work the contractor produces?
In Canada the contractor owns copyright in what they create unless it is assigned in writing. Use the ownership section to assign it to the client if that is the deal, and say when the assignment takes effect.
Does the contractor charge sales tax?
If the contractor is registered for GST/HST (or state sales tax where it applies to services), yes, and their invoice should show the registration number.
Do I withhold tax from a contractor's pay?
Generally not for a Canadian contractor paid by a Canadian client; the contractor handles their own taxes. Non-resident contractors and US clients have reporting or withholding rules. Ask an accountant.
Do both parties sign?
Yes. The client and the contractor both sign, and each keeps a copy.
Sources checked
- Canada Revenue Agency, RC4110 Employee or Self-employed? (intent, control, tools, subcontracting, financial risk, investment, profit or loss)
- Government of Ontario, ESA guide: Employee status (employers may not treat employees as if they are not employees)
Checked 2026-09-19. This page is general information and not legal, tax or financial advice.