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Contractor vs employee calculator

A big day rate isn't a big salary. Compare contracting against a salaried offer with every cost counted — and find your break-even rate.

Contracting

$
days
$
%

Employee offer

$

Plus employer super at the 2025–26 guarantee rate, paid leave and sick leave built in.

Residency
HECS / HELP
Financial year
Contracting wins by
$27,042
per year in total value — cash plus super
Break-even day rate

$529 per day

matches the $100,000 package at 220 billable days, $5,000 expenses and 12% self-funded super.

ContractorEmployee
Gross income$154,000$100,000
Business expenses−$5,000$0
Super (12% self-funded vs employer-paid)−$17,880+$12,000
Taxable income$131,120$100,000
Tax, Medicare & HECS−$32,746−$22,788
Cash in hand$98,374$77,212
Super saved for retirement$17,880$12,000
Total value (cash + super)$116,254$89,212

Cash in hand, across pay cycles

WeeklyFortnightlyMonthlyYearly
Contracting$1,892$3,784$8,198$98,374
Employee$1,485$2,970$6,434$77,212
Difference$407$814$1,763$21,162

Contractor figures assume sole-trader/PSI taxation as an individual with 2025–26 ATO rates — under personal services income rules, most contractors are taxed this way regardless of structure. GST is excluded (it passes through). Employees also receive paid annual and sick leave, notice and protections that have no line item here; contractors carry insurance and admin. General information only — not tax or financial advice.

What a day rate has to cover

Divide a $100,000 salary by 260 weekdays and you get $385 a day — but no contractor should ever accept that rate. An employee's salary comes wrapped in things a contractor must self-fund: 12% super, four weeks of paid leave, ten-plus public holidays, sick days, insurance, equipment, an accountant, and the bench time between contracts when nobody is paying at all. The calculator makes each of these a visible line instead of a vibe.

Billable days drive everything. The difference between 240 and 200 billable days is nearly 20% of gross income, which is why the same day rate can feel lucrative one year and thin the next. Set the days honestly — including a realistic allowance for gaps — and the comparison changes materially.

Tax works the same, structure rarely helps. Under the ATO's personal services income rules, income earned mainly from your personal skills is taxed at your individual marginal rates even if it flows through a company. The genuine tax lever contractors do control is deductible super contributions — money moved from your marginal rate (often 30–37%) to the 15% contributions rate. The calculator treats your self-funded super percentage exactly that way, and counts it in the total-value comparison so contracting isn't flattered by simply skipping retirement savings.

The break-even day rate answers the negotiating question directly: given your billable days, expenses and super rate, what daily rate delivers the same total value as the salary on the table? Anything above it is compensation for the risk, insecurity and missing protections of contracting — decide what that premium is worth to you.

Figures assume individual PSI taxation with the selected year's ATO rates, exclude GST, and don't model payroll tax, workers' compensation or state nuances. General information only — not tax or financial advice.

Frequently asked questions

What day rate matches a $100,000 salary?

Roughly $530 a day. At 220 billable days with $5,000 of expenses and 12% self-funded super, a $530/day contract delivers about the same total value (cash plus super) as a $100,000 salary with employer super — before counting paid leave, sick leave and job security, which push the true figure higher.

Why do contractors need a higher rate than the salary equivalent?

A contractor's rate must cover everything an employer normally pays: 12% super, four weeks annual leave, public holidays, sick leave, insurance, equipment and unpaid gaps between contracts. A common rule of thumb is that a fair day rate is 25–40% above the salary divided by working days.

How many billable days should I assume?

A year has about 260 weekdays. Subtract public holidays (~10), the leave you'll actually take (~20), sick days and any bench time between contracts — 210 to 230 billable days is realistic for a well-booked contractor; new contractors often bill fewer.

How is contractor income taxed?

Under the ATO's personal services income (PSI) rules, income earned mainly from your personal skills is generally attributed to you and taxed at individual marginal rates — even through a company or trust. That's why this calculator applies ordinary individual tax to contractor income.

Do contractors have to pay their own super?

Sole traders generally aren't required to pay themselves super, but skipping it just converts retirement savings into apparent income. Personal contributions are tax-deductible (concessional, taxed at 15% in the fund) — the calculator lets you set the rate and treats it as deductible, the fair comparison against an employee's 12%.

What about GST?

If you're registered (required over $75,000 turnover), you add 10% GST to invoices and remit it to the ATO — it passes through and isn't income, so the calculator excludes it. Just quote rates ex-GST when comparing.