Contractor vs Employee Calculator
Whether a contract day rate beats a salary once you pay your own super, leave and costs.
At $650 a day for 220 days, contracting leaves you $18,680 a year better off than a $100,000 salary, once you pay yourself the same super. You'd need at least $525 a day to break even.
Paid leave is counted through the days you bill: an employee is paid for 52 weeks, a contractor only for the days they work. Assumes an Australian resident with private hospital cover and no HECS.
The employee's take-home is the salary less income tax (with the low income tax offset) and the Medicare levy. The contractor invoices day rate x days, pays business costs, and puts the same super into their fund that the employer would have (12% of the salary), claimed as a tax deduction. Tax on what's left is worked out at the same rates, less the small business income tax offset (16% of the tax, up to $1,000). The break-even rate is the day rate where both take-home figures are equal.
Rates checked September 2026 against the ATO.
Why a day rate needs to be higher than a salary
A $100,000 salary is really more than $100,000. Your employer also pays 12% super, and pays you for about four weeks of annual leave, public holidays and sick days when you don't work.
As a contractor you pay your own super, and you only earn on the days you bill. Most contractors bill 200 to 230 days of the 260 weekdays in a year, once holidays, leave and gaps between contracts are taken out. You also pay for your own insurance, accounting and equipment.
That's why a day rate of salary / 260 nearly always leaves you worse off. The calculator finds the break-even rate for your own numbers.
What else changes when you contract
There's no tax taken out of what you're paid, so you need to put money aside for tax and pay it when you lodge, or each quarter through PAYG instalments. The sole trader tax calculator shows how much of each invoice to keep.
- Register for GST once your turnover reaches $75,000 a year, and add 10% to your invoices.
- If most of your income comes from one client for your own work, the personal services income rules can limit the deductions you can claim.
- You lose the protections of employment, such as notice, redundancy pay and paid leave.
Frequently asked questions
With 12% super, 220 billable days and $5,000 of business costs, about $525 a day matches the take-home pay. Change the inputs in the calculator to match your situation.
Sole traders don't have to pay super for themselves, but most do, and personal contributions can be claimed as a tax deduction up to the concessional cap. The calculator puts the same super into your fund that an employer would.
There are about 260 weekdays in a year. Take out around 10 public holidays, 4 weeks of holidays, some sick days and any time between contracts, and 200 to 230 billable days is typical.
Only if you're registered for GST. The day rate in this calculator is before GST, because GST you collect goes to the ATO.