The two arrangements
All amounts in $ for a full year. Contract income is without GST. Change any figure and the page recalculates. Yellow boxes are waiting for an entry.
What each arrangement leaves you
Cash after tax and expenses, plus the super that lands in your fund after its 15% contributions tax. Paid leave is shown separately because a contractor has none.
Cash after tax and super in your fund ($)
What the numbers do not show
The contract income and day rate that match the employee figure
The contract income at which cash after tax matches the employee's, with the contractor putting the same amount into super as the employer would.
The tax on each side
About this calculator
Purpose. To compare, for an Australian resident, the cash and super left from an employee salary and from contracting as a sole trader at the figures you enter, and to estimate the contract income and day rate that would leave the same cash.
Assumptions and why we chose them. You can change every assumption above. Rates are as at , for the financial year.
- Resident income tax rates, the low income tax offset, the 2% Medicare levy and study loan repayment rates, as published by the ATO. The Medicare levy uses single thresholds and the surcharge is not included, as if private hospital cover is held.
- Employer super at the super guarantee rate, up to the maximum contribution base. Both sides lose 15% contributions tax in the fund.
- The contractor claims their super contribution as a personal deduction. It counts as a reportable super contribution, so it is added back for the study loan repayment.
- The match uses the contractor contributing the same dollar amount of super as the employer would, so the super on both sides is equal and only cash differs.
- 240 billable days is 48 weeks of 5 days. The leave defaults are the National Employment Standards minimums and a typical number of public holidays.
- Employee work deductions are treated as money spent, so they come out of cash on that side, as business expenses do for the contractor.
- From 2026-27 the employee side includes the $1,000 standard work deduction, which applies automatically with no receipts. It is the lower of $1,000 and the salary, reduced dollar for dollar by the employee work deductions you enter. It applies only to salary and wages, so the contractor's business income does not get it. It is not available for 2025-26.
- The example (100,000 each way, 6,000 of contractor expenses, 12% super) is a common comparison point.
Limitations and their effect.
- It does not decide whether you are legally an employee or a contractor. That depends on your contract and how the work is done, not on having an ABN.
- It does not apply the personal services income rules, which can deny some deductions and make the comparison worse for the contractor. The small business income tax offset is left out because personal services income does not qualify.
- It does not price income protection, public liability or professional indemnity insurance, workers compensation, payroll tax, long service leave or redundancy entitlements.
- It does not model a company or trust, other income, the Medicare levy surcharge, family thresholds, or the concessional cap beyond a warning. Division 293 tax, an extra 15% on super contributions where income plus contributions is over 250,000, is not included, so at high incomes both sides would have less in super than shown.
- It does not include the timing of tax: a contractor pays PAYG instalments and BAS quarterly, while an employee has tax withheld each pay.