Australian contractor guide

How to compare a contractor day rate with an employee salary

A higher day rate does not automatically mean more spendable income. Contractors usually need to fund time off, business costs and their own financial buffer.

Start with billable days, not 52 weeks

Estimate the days you can genuinely invoice after allowing for holidays, public holidays, sickness, administration, sales time and gaps between engagements. Multiply that by the quoted day rate to get a revenue figure.

Then subtract costs and compare the whole package

Accountancy, insurance, equipment, training and software reduce revenue. An employee package can also include paid leave, employer super, sick leave and other benefits. Compare both cash pay and benefits before deciding.

Do not assume tax treatment from a label

Whether an arrangement is genuinely contracting depends on the facts. The ATO provides information about employee or contractor status and separate super obligations may apply.