Contractor Pay Calculator

This contractor calculator compares the take-home pay and super of a sole trader on a daily rate with an employee on a salary, and finds the break-even day rate. It is for anyone weighing an ABN contract against a permanent role. It uses ATO 2026-27 tax rates, the 2% Medicare levy and the 12% super guarantee, read 31 October 2026.

Daily rate (excl. GST) $750/day
Billable days per year 220 days
Salary to compare (excl. super) $140,000
Business expenses $5,000/yr
Your super
Registered for GST
Required from $75,000 turnover
2026-27 resident tax rates (ATO)
$0 to $18,200 Nil
$18,201 to $45,000 15%
$45,001 to $135,000 30%
$135,001 to $190,000 37%
$190,001 and over 45%
Plus the 2% Medicare levy. Low income tax offset up to $700.
 
 
Annual take-home comparison
Contractor (sole trader)
 
take-home after tax
Fees (excl. GST) 
Business expenses 
Super contribution 
Taxable income 
Income tax 
Medicare levy 
Employee (PAYG)
 
take-home after tax
Salary 
Employer super (12%) 
Income tax 
Medicare levy 
Side by side
Contractor take-home 
Employee take-home 
 
Take-home per hour
Contractor
 
per billable hour
vs
Employee
 
per paid hour (38 × 52)
Paid entitlements an employee gets

Valued at the comparison salary. A contractor funds these from their rate.

Annual leave, 4 weeks (20 days) 
Personal and carer's leave, 10 days 
Employer super at 12% 
Paid public holidaysvaries by state
Break-even daily rate
 
 
Note: Estimates only, not tax advice. The calculator models a sole trader using ATO 2026-27 rates. Company and trust structures, the personal services income rules, PAYG instalments and the Medicare levy surcharge are not modelled.

How this is calculated

  1. Fees = daily rate × billable days, excluding GST. If you are registered, GST of 10% is added to invoices and paid to the ATO, so it is shown but not counted as income.
  2. Super (if ticked) = (fees − expenses) × 12 ÷ 112, the same 12% an employer adds to a salary, capped at the $32,500 concessional cap. It is treated as a deductible personal contribution.
  3. Taxable income = fees − expenses − super.
  4. Income tax uses the 2026-27 resident rates: nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, less the low income tax offset ($700, reducing to nil at $66,667).
  5. Medicare levy = 2% of taxable income. Low-income reductions and the Medicare levy surcharge are not modelled.
  6. Employee: the same tax and levy on the salary, with employer super of 12% paid on top.
  7. Break-even day rate: the rate at which contractor take-home equals employee take-home, found by search.
  8. Hourly rates use 7.6 hours a day, the 38-hour NES week.

The calculator models a sole trader. Company structures and the personal services income rules are not modelled.

Sources

Worked example

A sole trader charging $750 a day for 220 days, with $5,000 of expenses and super at 12%, compared with a $140,000 salary:

  1. Fees: $750 × 220 = $165,000. Less expenses: $160,000.
  2. Super: $160,000 × 12 ÷ 112 = $17,142.86. Taxable income: $142,857.14.
  3. Income tax: $31,020 + 37% × ($142,857.14 − $135,000) = $33,927.14. Medicare levy: $2,857.14.
  4. Contractor take-home: $106,072.86.
  5. Employee on $140,000: tax $32,870.00, Medicare levy $2,800.00, take-home $104,330.00, plus $16,800.00 employer super.
  6. The contractor takes home $1,742.86 more. The break-even day rate is $735.45.

Frequently asked questions

How much tax does a contractor pay in Australia?

A sole trader contractor pays tax at the individual rates on taxable income, which is fees less business expenses and deductible super contributions. For 2026-27 the rates are nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above that, plus the 2% Medicare levy. The low income tax offset applies up to $66,667.

Do contractors have to pay their own super?

A sole trader is not paid super guarantee by a client unless the contract is mainly for their labour, in which case the ATO treats them as an employee for super purposes. Otherwise you can make personal contributions and claim a tax deduction. Deductible contributions are taxed at 15% in the fund and count towards the concessional cap of $32,500 for 2026-27.

When does a contractor need to register for GST?

You must register for GST when your GST turnover is $75,000 or more, either over the current and previous 11 months or projected over the current and next 11 months. Once registered you add 10% GST to your fees and pay it to the ATO, so it does not change your take-home pay.

What day rate equals a salary?

It depends on billable days, expenses and super. With 220 billable days, $5,000 of expenses and super paid at 12%, a day rate of $735 gives the same take-home pay as a $140,000 salary. Use the break-even figure in the calculator for your own numbers.

How many billable days are there in a year?

There are about 260 weekdays in a year. Employees get 4 weeks (20 days) of paid annual leave and 10 days of paid personal and carer’s leave under the National Employment Standards, plus paid public holidays, which vary by state. Taking similar time off leaves a contractor with about 220 billable days.

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