Contractor Pay Calculator

Take the salary, add the 12% super guarantee that applies for 2026-27, then divide by the days you will actually bill. A $150,000 salary is a $168,000 package, so 230 billable days needs $730 a day and 252 days needs $667. Anything under that is a pay cut before you count a single day of unpaid leave.

Rate times billable days gives your fees excluding GST. Deductible business expenses come off that to leave taxable profit. The 2026-27 resident scale, the low income tax offset and the 2% Medicare levy then apply, plus any HELP repayment. GST never enters the figure because it was never your money.

1. Rate to annual fees. An hourly rate is multiplied by the hours in your contract day first. 7.6 hours is the 38-hour week split over five days; plenty of IT and engineering contracts run 8, so the calculator asks rather than assumes.
2. Fees to profit. Deductible expenses come off. A contractor is taxed on profit, unlike an employee who is taxed on gross wages and claims work-related deductions separately.
3. Profit to tax. The same 2026-27 tax brackets that apply to a salary, the same $18,200 tax-free threshold, the same Medicare levy. There is no separate contractor rate.
4. Study loans. Tick the HELP box and the compulsory repayment is added above $69,528 for 2026-27. The HECS repayment calculator breaks that part down on its own.

The calculator models a sole trader invoicing under an ABN. Contracting through a company, trust or partnership adds a layer this page does not cover. For the profit-only view without the day-rate conversion, use the sole trader tax calculator.

There are 261 weekdays between 1 July 2026 and 30 June 2027. Nine of them are weekday public holidays in NSW, which leaves 252 days a contract could actually run. Take four weeks off the way a permanent employee does and you are down to 232. None of that time off is paid.

Every day count above is our own calculation, not an ATO or Fair Work figure. The holiday dates come from the Fair Work public holiday lists for 2026 and 2027. Public holidays are set by each state and territory, so the count moves: NSW has 9 weekday public holidays inside 2026-27, Queensland has 10, and Victoria has 10 or 11 depending on where the 2027 AFL Grand Final Friday lands, which Fair Work still lists as to be confirmed. Weekend holidays are excluded and the substitute weekday holidays that NSW and Queensland add are included.

The four-week deduction mirrors the National Employment Standards entitlement, which gives full-time and part-time employees four weeks of paid annual leave. Contractors sit outside all of it. Fair Work puts it plainly: contractors are not entitled to the same pay and conditions as employees. That is the whole reason the 260-day shorthand flatters a contract rate by roughly 30 days of income.

A contract rate has to fund super, four weeks of annual leave, the public holidays, sick days, income protection insurance and the weeks between contracts before it beats a salary. At 230 billable days, one 230th of the salary plus 12% is break-even, and every one of those items sits on top of that number rather than inside it.

Convert the contract into a package figure and compare packages, not headline numbers. The table below runs common day rates through the 2026-27 resident scale and shows the salary that carries the same total value.

Often yes. If the contract is mainly for your labour, you cannot send someone else to do the work, and you are not paid for a defined result, the ATO treats you as an employee for super guarantee purposes and the hirer must pay 12% for 2026-27 on the labour component. Holding an ABN does not change it.

The ATO states it directly: if you pay independent contractors mainly for their labour, they are employees for superannuation guarantee purposes. All three of these conditions have to be met before the obligation attaches.

• The contract is mainly for their labour, meaning more than half the dollar value is labour.
• They are paid for their personal labour and skills, not on achieving a specified result.
• They must perform the work themselves and cannot delegate it to someone else.

Three practical points follow. First, an extra amount equal to the super rate paid into your bank account is not a super contribution. The ATO says so in terms: to avoid the super guarantee charge the hirer has to pay the contribution into a fund. A hirer who says the rate is inclusive of super has not discharged anything. Second, choice of fund applies, so the hirer should offer it within 28 days of your start date or request your stapled fund details. Third, the carve-out is structural: a hirer who contracts with a company, trust or partnership owes no super for the person doing the work.

Super is calculated on the labour component of the contract. Payments for materials, equipment, overtime at overtime rates and GST are excluded from the base. Where the contract does not split labour out, the ATO accepts market values. From 1 July 2026 the maximum contribution base is an annual figure of $270,830 for 2026-27, and Payday Super means the contribution is due each payday rather than each quarter. Run the numbers on the super guarantee calculator, and if you are paid to deliver a result rather than to turn up, the sole trader tax calculator and the ABN tax guide cover the fund-it-yourself case.

At $75,000 of GST turnover, and you have 21 days to register once you cross it. Both the current 12-month figure and the projected 12-month figure count, so either one reaching the threshold triggers registration. Registering does not lift your effective rate.

Current GST turnover is the current month plus the previous 11. Projected GST turnover is the current month plus the next 11. Sales of business capital assets and sales made because you are winding down come out of the projected figure. If your current turnover is over the threshold but your projected turnover is under it, you do not have to register. Choosing to register generally locks you in for at least 12 months, and failing to register when required can leave you paying GST on past sales even where you never charged it, plus penalties and interest.

The arithmetic that matters to a rate, and this is our calculation off the ATO 10% rate rather than a published ATO figure: a $1,000 day rate quoted plus GST invoices at $1,100, and the extra $100 is not income. It sits in your account until the activity statement, less the GST credits on your business purchases. Quote $1,000 including GST instead and you keep $909.09, because 10/11ths is the fee and the rest belongs to the ATO. Always establish which way a rate is quoted before you accept it. The calculator above works in GST-exclusive dollars for exactly this reason.

If more than half of what you earn is a reward for your own skill or effort, it is personal services income. Being paid by the hour or by the day means you almost certainly fail the results test, and one client or one agency means you fail the 80% rule too. The rules then apply to you.

PSI is income that is mainly a reward for personal effort or skill, and the ATO names the industries it catches: financial professionals, IT consultants, engineers, construction workers and medical practitioners. Earning PSI is not itself a problem. The problem is the PSI rules applying, which they do unless you can self-assess as a personal services business.

The results test. All three conditions have to be met for at least 75% of your PSI: you are paid to produce a specific result, you provide the equipment or tools where any are required, and you fix mistakes at your own cost. The ATO is blunt about what that means for a day rate: if you are paid on an hourly basis or daily rate for the services you provide, it is unlikely that you will meet the first condition of the results test, because payments on an hourly or daily basis are not generally linked to producing a specific result or outcome.

The 80% rule. If 80% or more of your PSI comes from one client and their associates, you do not meet the 80% rule and the PSI rules apply. Under 80% and you do meet it, which opens up the other three tests: the unrelated clients test, the employment test and the business premises test. Associates are aggregated, so two companies under common control count as one client.

Agency work is the trap. The ATO says an agency contractor most likely will not pass the results test, because you are hired to provide services on an ongoing basis for an hourly or daily rate rather than to produce a specific result. Worse, the source of your PSI is the agency, not the end clients. One agency means one source, so you will not meet the 80% rule, and registering with an agency is not making offers to the public under the unrelated clients test. Two agencies splitting your income changes the answer. The ATO publishes a personal services income decision tool that walks through it properly.

Less than most contractors expect. Where the PSI rules apply the ATO treats you as though you are in the same position as an employee for deductions, and rent, mortgage interest, rates and land tax on your home are out. Insurance, licensing and accounting fees survive because an employee does not incur them.

The structural difference is real: a contractor is taxed on profit, being business income minus deductible expenses, while an employee is taxed on gross wages and claims work-related deductions separately in their own return. What the difference does not buy is a longer list of claimable items. The three golden rules apply either way. The expense must have been for your business, available as an allowable deduction and not for private use. Mixed-use expenses are apportioned. You must have records to prove it, and you keep them for five years.

Since 26 August 2024 a constitutionally covered business has to apply the whole of relationship test, which weighs the real substance and practical reality of how the work is done rather than the words in the contract. Calling someone a contractor does not make them one. State-referred businesses still use the start of relationship test.

The High Court decisions in CFMMEU v Personnel Contracting and ZG Operations v Jamsek, both handed down in 2022, put the legal rights and obligations in the contract at the centre of the question. The ATO applies the same idea: an employee serves in your business and performs work as a representative of it, while an independent contractor provides services to your business and performs work to further their own. Any label used in the contract, independent contractor included, will not determine or be relevant to how the relationship is characterised. The old indicia still matter as evidence: control, integration, mode of remuneration, ability to delegate, tools and equipment, risk, and generation of goodwill. Being paid for time worked sits on the employee side of the remuneration row.

Getting it wrong has a price. Sham contracting, meaning telling a worker they are a contractor when they are an employee, carries maximum penalties per contravention of $21,840 for individuals, $109,200 for businesses with fewer than 15 employees and $546,000 for larger businesses. On the ATO side a business faces a PAYG withholding penalty, the super guarantee charge, which costs more than the super would have, and a Part 7 penalty of up to 200% of that charge. Fair Work cannot decide whether you are a contractor, and neither can this page. Both are inputs to a conversation with an adviser.

Nobody withholds tax from your invoices. The first profitable year arrives as one assessment, then the ATO moves you onto quarterly PAYG instalments. Set aside your effective rate from the first invoice: on $180,000 of profit that is $51,270, or 28.5%, a little under a third.

Once the ATO enrols you, the PAYG instalment calculator estimates the quarterly figure, and the PAYG instalments guide covers who gets enrolled and how to vary an instalment down when a contract ends early. If the one-bill-then-instalments rhythm is unfamiliar, withholding versus instalments explains why contractors sit on the instalment side of the system.

Two options soften the cash-flow shape. An eligible contractor can enter a voluntary agreement with a hirer so the hirer withholds tax from payments, which makes contract income behave more like a wage. And if you do not quote an ABN on the invoice, the hirer withholds the top rate of tax from any payment over $75 excluding GST, which is not a plan so much as a penalty. Our PAYG withholding guide covers both.

Both sit with the hirer, both are state or territory matters, and both can reach payments made to contractors. A hirer does not generally cover a contractor for workers compensation or paid sick leave, so income protection insurance is yours to arrange and to pay for.

business.gov.au puts payroll tax as a tax on the total wages a business pays each month that may also include payments made to some contractors, collected by the state or territory the workers are in. Thresholds and rates vary by jurisdiction, and our guide to how to calculate payroll tax sets out the 2026-27 threshold and rate for all eight of them, including the contractor provisions that decide whether your invoices count as wages at all. The practical point for a rate negotiation is that a hirer facing payroll tax and workers compensation on contractor payments is not comparing your day rate against a salary alone. That is often what sits behind a refusal to move on rate.