Contractor vs Employee Calculator
Compare take-home pay as a contractor (ABN) versus an employee. See the real difference including super, leave, GST, and hidden costs.
Disclaimer
This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available ATO data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.
Frequently Asked Questions
What's the difference between a contractor and an employee?
What hourly rate should I charge as a contractor to match my salary?
Do contractors get paid super?
Should I register for GST as a contractor?
What is Contractor vs Employee?
Comparison of take-home pay as a contractor (sole trader on ABN) versus an employee (PAYG salary), accounting for super, leave entitlements, GST, insurance, and self-employment tax overhead.
How this calculator works
Enter your prospective hourly rate as a contractor and your equivalent PAYG salary. The calculator applies typical contractor uplifts (no super = self-funded 12%, no leave = 4 weeks + sick days, no workers comp = self-funded ~2%) and compares net annual take-home pay accounting for income tax + Medicare + the contractor's typical extra costs.
Why Contractor Rates Are Higher
A contractor's hourly rate must cover items the employer pays for an employee: super (12%), 4 weeks paid leave (~7.7% of hours), 10 sick days (~3.8%), 10 public holidays (~3.8%), workers compensation (~2%), professional indemnity insurance (~1%), bookkeeping/BAS (~1%), training/admin gaps (~3-5%). Total uplift: ~30-40%. So a $90k employee = ~$76/hr contractor target.
Personal Services Income (PSI) Trap
PSI rules (Part 2-42 ITAA 1997) treat income from your personal labour as if you were an employee for tax purposes — limiting deductions and forcing you to pay super on yourself. To pass PSI tests you need: ≥80% from one client = fail; OR pass results test (results-based pay + tools + liability for defects); OR ≥75% from unrelated parties + advertising. Most one-client contractors fail PSI and get treated as employees for tax.
GST Registration
Required when annual turnover exceeds $75,000 ($150k for NFPs). Below that threshold registration is voluntary. Voluntary registration adds quarterly BAS admin but lets you claim GST credits on your business expenses. Most enterprise clients prefer GST-registered suppliers (they can claim credits). Hobbyists and casual contractors typically don't register.
Super for Contractors
Generally NO — you fund your own. EXCEPTION: SGAA s12(3) — if your contract is mainly for your LABOUR (not for goods), the hirer must pay SG on your behalf. Many genuine 'contractors' fall under this rule and don't realise. Test: are you paid for time, or for a deliverable/result? Time = likely SG required. Deliverable = likely not.
Tax Deductions Available to Contractors
Home office (rate or actual cost), vehicle (cents-per-km or logbook), equipment depreciation, software subscriptions, internet & phone (work-use %), professional development, accountant fees, marketing/advertising, insurance premiums, business loan interest. Larger deductions vs employees, but extra admin to track. Use accounting software (Xero/MYOB) and keep receipts.
Updated for the 2025-26 financial year (1 July 2025 to 30 June 2026).
Official Sources
All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.
Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.