The FisCalc
// EMPLOYMENT

Contractor vs Employee
Calculator

Find the daily rate you need as a contractor to match your permanent salary — or see how your existing rate compares. Accounts for super, leave, sick days, insurance, and expenses.

// CONTRACTOR_DETAILS
Your rate and working arrangements
Days worked per week5 days
Self-funded super contribution11.5%
// EMPLOYEE_DETAILS
Permanent role for comparison
Employer super rate11.5%
Annual leave entitlement4 weeks
Paid sick leave days10 days
State (public holidays)
Total employer cost: $144,950 (salary + 11.5% super)

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Contracting wins on take-home pay
+$16,384/year
Based on 218 billable days · $185,300 gross contract income · Break-even daily rate: $720/day
CONTRACTOR
$111,068
Take-home · $106.25/hr effective
Billable days218 days
Gross income$185,300
Self-funded super−$21,310
Business expenses−$5,000
Insurance−$2,500
Taxable income$156,491
Income tax−$42,293
Medicare levy−$3,130
Take-home cash$111,068
Net super to fund+$18,113
EMPLOYEE
$94,683
Take-home · $65.52/hr effective
Base salary$130,000
Income tax−$32,717
Medicare levy−$2,600
Take-home cash$94,683
Employer super+$14,950
Annual leave (4 wks)+$10,000
Paid sick leave (10 days)+$5,000
Public holidays (12 days)+$6,000
Total hidden benefits$35,950
Break-even analysis: At your current setup (218 billable days with 10 unpaid gap days), you need a daily rate of at least $720/day to match the take-home pay of the $130,000 permanent role. Your current rate of $850/day is $130/day above the threshold.

Remember: contractors also miss out on $35,950 in annual leave, sick leave, public holidays, and employer super that employees receive automatically.
// FULL_COMPARISON_TABLE
Complete annual income comparison
ItemContractorEmployeeDifference
Gross income / salary$185,300$130,000+$55,300
Income tax$42,293$32,717−$9,576
Medicare levy$3,130$2,600−$530
Business expenses$5,000–−$5,000
PI/PL insurance$2,500–−$2,500
Take-home cash$111,068$94,683+$16,384
Super (net to fund)$18,113$14,950+$3,163
Paid leave value–$21,000−$21,000
Total incl. super + leave$129,181$130,633−$1,453
General information only. Contractor income assumes sole trader or Pty Ltd structure (Pty Ltd company tax is not modelled). GST must be remitted to the ATO quarterly if registered — it is not income. This model does not include income protection insurance, workers compensation, or public liability claims. PSI (Personal Services Income) rules may apply and can affect deductibility of expenses. Seek advice from an accountant. Not financial or tax advice.

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Contracting ahead by $16,384/yr
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The True Cost of Going Contracting in Australia

Contracting typically pays a higher gross rate than equivalent permanent employment — but the comparison is not as simple as the hourly or daily rate suggests. As a contractor, you forfeit a range of statutory entitlements that have real dollar value: employer superannuation contributions (11.5% of income), paid annual leave (4 weeks/year), personal and carer's leave (10 days/year), public holidays (approximately 11 days/year), and redundancy entitlements. Aggregated, these entitlements are worth approximately 20–25% of base salary for a typical permanent employee — which is why the rule of thumb for contractor rate equivalence is 1.25–1.4x the permanent equivalent.

The 1.25x–1.4x contractor premium — unpacked

A permanent employee earning $120,000 base plus 11.5% super ($13,800) receives total employment cost of approximately $133,800. Add 4 weeks annual leave ($9,231), 10 days sick/carer's leave ($4,615), and a pro-rata share of redundancy exposure ($3,000–$5,000), and the total cost to the employer is $150,000–$155,000 per year. A contractor billing at 1.3x the base salary ($156,000/year) is roughly equivalent on a total remuneration basis — but only if they are genuinely generating billable work for most of the year. Periods of non-billable time (between contracts, business development, training) are entirely at the contractor's cost.

ATO sham contracting and the Personal Services Income rules

The ATO distinguishes carefully between genuine contractors and employees disguised as contractors. Sham contracting arrangements — where a business treats a worker as a contractor to avoid employment obligations when they are economically dependent on that business — attract significant penalties. The Personal Services Income (PSI) rules also affect how a sole trader or company can distribute or retain contractor income for tax purposes: if 80%+ of your income comes from a single payer, PSI rules apply, and most income splitting strategies are unavailable. These rules apply regardless of the entity structure used.

Do I need to register for GST as a contractor?
If your annual turnover exceeds $75,000, GST registration is mandatory. For most contractors, this threshold is quickly reached. Once registered, you charge GST on your invoices (adding 10% to your rate), lodge BAS returns quarterly or monthly, and can claim GST credits on business expenses. The GST collected is not your income — it flows through to the ATO. If your clients are GST-registered businesses, they reclaim the GST you charge, so your rate negotiation should focus on the GST-exclusive figure. If your clients are individuals or non-registered entities, GST is an effective 10% cost to them.
What structures can I use for contracting?
Most contractors operate as a sole trader (simplest, cheapest, limited tax flexibility), a company (more complex, potential for salary/dividend splitting, but ASIC registration and compliance costs), or a trust (most flexible for income distribution but significant ongoing costs and compliance). The optimal structure depends on your income level, personal circumstances, and plans for growth. For contractors earning under $150,000/year, sole trader is usually simplest. Above this, a company or trust structure with professional advice may offer meaningful tax savings that outweigh the additional costs.
How do I fund my own super as a contractor?
As a sole trader or company contractor, no one is obligated to make super contributions on your behalf (unless required by your enterprise agreement). You must fund super yourself by making personal concessional contributions and claiming them as a tax deduction in your individual tax return (under the "personal deductible contributions" rules). The same $30,000 concessional cap applies. A common approach is to treat 11.5% of gross contractor income as a mandatory "self-SG" contribution — this maintains contribution consistency with what you would receive as an employee and builds retirement savings.

// INCOME_TAX

Model your total tax position as a contractor — including super, GST, and business deductions.

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// NOVATED_LEASE

As a contractor, a novated lease can still be structured via your employer — if you have one.

Novated Lease Calculator →
General information only. Contractor vs employee comparisons depend heavily on individual tax circumstances, PSI rules, and entity structure. Consult a registered tax agent and/or accountant before choosing a contracting structure.

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