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$
Your daily rate before GST
220 = ~44 weeks (allows for gaps between contracts)
$
Accountant, insurance, equipment, software, super
$
Optional — enter to compare to a specific job offer
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Equivalent Permanent Salary
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Contractor vs Employee in Australia: The True Financial Comparison
The contractor premium — the extra daily rate needed to make contracting financially equivalent to permanent employment — is typically 25–40% above the equivalent permanent daily rate. This accounts for the benefits employees receive that contractors must fund themselves: superannuation, annual leave, sick leave, long service leave, and the costs of running a business (insurance, accounting, equipment).
What Employees Get That Contractors Don't
| Benefit | Employee Value | Contractor Must Fund |
|---|---|---|
| Superannuation (11.5% SG) | ~$13,800 on $120K salary | Must contribute own super |
| Annual leave (4 weeks) | ~$9,230 on $120K | No pay when not working |
| Sick leave (10 days) | ~$4,615 on $120K | No pay when sick |
| Public holidays (~10/year) | ~$4,615 on $120K | No pay on public holidays |
| Long service leave | Value after 7-10 years | No entitlement |
| Training and development | Often employer-funded | Own expense |
Estimates based on 2025-26 ATO rates. Individual circumstances vary. Not financial or legal advice.
Frequently Asked Questions
How much more should I charge as a contractor vs employee in Australia?
As a rule of thumb, contractors need to charge 25–40% more than their equivalent permanent daily rate to break even on total compensation. The exact premium depends on how much super you contribute, how many gaps between contracts you expect, and your contractor overhead costs. This calculator shows your exact break-even point.
Do contractors pay more tax than employees in Australia?
Contractors pay tax at the same personal income tax rates as employees. However, as a sole trader you are responsible for setting aside your own tax throughout the year (PAYG instalments) and lodging a business tax return. You also pay 2% Medicare levy and potentially the Medicare Levy Surcharge if you earn over $93,000 without private hospital cover.
Do Australian contractors need to register for GST?
If your annual turnover exceeds $75,000 you must register for GST and add 10% to your invoices (collected on behalf of the ATO). Most IT and professional contractors earning a market daily rate will exceed this threshold. GST registration means lodging a BAS (usually quarterly) and requires separate GST accounting.