Day rate vs salary
Contractor & ABN calculator
A $900 day rate sounds huge until you take out unpaid holidays, public holidays, sick days, super and expenses. See what it's really worth as a salary.
- Same engine as the pay calculator
- Private — runs in your browser
Insurance, accounting, equipment, software, phone
Claimed as a deduction (within the concessional cap)
Take-home a year $137,333 $11,444 a month on average
Equivalent employee salary $191,401 + super, with paid leave, for the same money
| Billed (215 days × $850) | $182,750 |
|---|---|
| less business expenses | −$4,000 |
| less personal super contribution | −$21,450 |
| Taxable income | $157,300 |
| Income tax + Medicare | −$41,417 |
| incl. small business income tax offset | $1,000 |
| Take-home | $137,333 |
| Super after 15% tax | $18,233 |
Compare with a salary
To match $150,000 + super ($110,820 take-home and $15,300 super), you'd need a day rate of about $674.21 excluding GST. Your rate beats it by $37,795 a year.
Before you invoice
- Set aside about 23% of every invoice for tax. No tax is withheld from ABN income, and the ATO will put you into PAYG instalments after your first return.
- Your turnover is over $75,000, so you must register for GST, add 10% to your invoices and lodge BAS.
- You won't get paid leave, and super isn't compulsory for sole traders, so budget for both.
- Check the personal services income rules if most of your income comes from one client. They can limit your deductions.
Frequently asked questions
How do I convert a day rate to a salary?
Multiply the day rate by the days you’ll actually bill, which is usually 220 to 230 once holidays, public holidays, sick days and gaps between contracts are out. Take off expenses and the super you’ll pay yourself. An employee gets about 260 paid days a year plus super, so a day rate is worth much less than rate × 260.
Do contractors pay more tax?
The tax rates are the same. As a sole trader you can deduct business expenses and your own super contributions, and you get a small business income tax offset of up to $1,000. But nothing is withheld, so you need to set money aside, and you pay PAYG instalments once you’re in the system.
Can I earn ABN income on top of my job?
Yes. It’s added to your taxable income, so it’s taxed at your marginal rate. Add it under “Side hustle & ABN income” in the pay calculator to see the extra tax and how much to put aside from each invoice.
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