Contractor vs. Employee Calculator
Compare the true financial difference between contracting and employment in Australia — tax, super, leave, insurance and more.
Your daily rate charged to clients (exc. GST)
After leave, public holidays, and unbillable time (220 is realistic for contractors)
The equivalent permanent role salary you are comparing against
How to Use
1. Enter your contractor day rate (exc. GST — the ATO handles GST separately) 2. Enter your realistic billable days — 220 is a good estimate (365 − weekends − 10 public holidays − 20 leave days − ~15 unbillable/admin days) 3. Enter the equivalent employee salary you'd earn in a permanent role doing similar work 4. Select whether your client pays super on your fees (uncommon but possible under the SG rules for "employee-like" contractors) 5. Toggle leave accounting to fairly compare: employees get 4 weeks annual leave + 10 sick days that contractors must self-fundAustralian note: The ATO has strict rules about sham contracting. Ensure you have a genuine contractor arrangement — multiple clients, your own ABN, control over how work is done.
Formula
Contractor Taxable = (Day Rate × Days) − Super − Business Expenses | Contractor Net = Taxable − Income Tax − Medicare | Employee Net = Salary − Income Tax − Medicare | Break-even Rate: solve for rate where Contractor Net = Employee Net + Employer SuperFrequently Asked Questions
How much more should a contractor earn than a permanent employee?
As a rule of thumb, contractors in Australia typically need to earn 30–50% more than their equivalent permanent salary to come out ahead after accounting for super, leave, insurance, accounting costs, and the risk of gaps between contracts. For a $120,000 salary role, you would generally need a day rate that generates $155,000–$180,000 gross to be genuinely better off as a contractor.
Do Australian contractors need to pay superannuation?
Yes, if you are a sole trader or working through your own company, you are responsible for your own super. Under the Superannuation Guarantee (SG) rules, your client may also be required to pay super on your fees if you work predominantly for them and are "employee-like" — check the ATO's contractor determination tool. The current SG rate is 11.5% for 2024–25, rising to 12% from 1 July 2025.
What business expenses can contractors claim in Australia?
Legitimate contractor expenses include: professional indemnity and public liability insurance, accounting and bookkeeping fees, home office running costs (67c/hr ATO rate or actual), work-related equipment and software, professional development and subscriptions, vehicle expenses for client travel (not commuting), and relevant professional memberships. Always keep records and consult a tax professional — the ATO scrutinises contractor deductions closely.
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