Income & tax

Contractor Day Rate vs Salary Calculator

Compare an ABN contract rate against a permanent salary on equal terms. A day rate has to cover the super, annual leave, sick leave and downtime an employer would otherwise fund, so the headline number needs to be well above the salaried equivalent before you are actually ahead.

Your details

Financial year

Rates and thresholds change every 1 July.

Day rate (ex GST)

Billable days a year

260 weekdays less leave, public holidays and downtime.

Weeks not billed

Annual leave plus sick leave you would have been paid for as an employee.

Costs

Business expenses

Insurance and accounting

Comparison

Equivalent salary

Take-home as a contractor

$121,410

Versus the salaried role

$-3,080

Day rate to match the salary

$820

Revenue $800 x 220 days	$176,000
Business expenses	− $8,000
Taxable income	$168,000
Income tax and Medicare	− $46,590
Contractor take-home	$121,410
Self-funded super at the SG rate An employee gets this on top	− $20,160
Contractor net of self-funded super	$101,250
—
Comparison salary	$140,000
Employer super on that salary	+ $16,800
Employee take-home	$104,330
Cost of unpaid leave 6 weeks not billed	$24,000
Difference	$-3,080

2026-27 ATO rates, checked 3 August 2026.

Some 2026-27 thresholds are not published yet, so prior-year figures are used: Medicare levy low-income thresholds; LITO; Concessional and non-concessional super caps.

Contracting through an ABN means no employer super, no paid leave, no notice period and no workers compensation. The comparison below funds super out of your own revenue but you should also price in the risk.

Turnover of $75,000 or more requires GST registration. GST is collected on top of your rate and remitted, so it does not change your income - but it does change your invoicing and BAS obligations.

If most of your income comes from one client for your personal effort, the personal services income (PSI) rules may attribute the income to you and deny some deductions.

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Frequently asked questions

What multiple of a salary should a day rate be?

A common rule of thumb is the annual salary divided by about 200 billable days, then increased by 25 to 30% to cover super and leave. This calculator does it properly rather than by rule of thumb - the break-even day rate is the figure that leaves you exactly level after funding your own super.

Will a lender treat contract income the same as a salary?

Usually not. Most lenders want two years of ABN registration and two years of tax returns before treating self-employed income as fully assessable, and some will average the two years or take the lower. If a purchase is close, the timing of the switch matters as much as the rate.

General advice warning: This calculator provides general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice.

Results are estimates based on the inputs and assumptions shown. Any interest rate used is an example and is not an offer of credit. Speak to a licensed credit representative before acting on these figures.