NodeSaver

§ — Contractor

ABN vs PAYG Calculator Australia 2024–25 — Contractor vs Employee Take-Home Pay

Compare your net income as an ABN sole trader contractor against an equivalent PAYG employee. Enter your daily or annual rate, business expenses, and super — we calculate the after-tax difference using 2024–25 ATO brackets.

Updated · 1 Jul 2024·Source: ATO·Read · 7 min

Your inputs

Rate input method
A$

= $192,000 annual revenue

A$

Phone, laptop, home office, professional development.

11.5%

Set to 11.5% to match PAYG employer super.

Inputs are local. Nothing is sent anywhere.

The result

Net take-home winner

PAYG employee

PAYG nets $2,890 more per year

ABN Contractor

Gross revenue
$192,000
Bus. expenses
−$5,000
Income tax
−$50,528
Medicare 2%
−$3,740
Self-funded super
−$22,080
Net take-home
$132,732
Effective tax rate
29.0%

PAYG Employee

Gross salary
$192,000
Entitlements
Included
Income tax
−$52,538
Medicare 2%
−$3,840
Employer super (11.5%)
+$22,080
Net take-home
$135,622
Effective tax rate
29.4%
ABN super / yr
$22,080
PAYG super / yr
$22,080
Break-even daily rate
$821/day

ABN rate to match PAYG take-home

Advertisement

How the calculation works

The ABN vs PAYG comparison uses the same progressive income tax brackets for both scenarios. The difference comes from what gets added or subtracted before and after tax.

PAYG employee calculation

  1. 1. Gross salary. Your employment contract salary before any deductions — the headline figure.
  2. 2. Income tax. Applied using 2024–25 resident brackets plus the Low Income Tax Offset (LITO).
  3. 3. Medicare levy. A flat 2% on incomes above the low-income threshold ($26,000).
  4. 4. Net take-home. Gross minus tax minus Medicare. Employer super of 11.5% is paid on top of your salary — it does not reduce take-home.

ABN contractor calculation

  1. 1. Gross revenue. Your invoiced amount — strip GST if your quoted rate includes it, since GST is not income.
  2. 2. Business expense deductions. Legitimate operating costs (phone, laptop, home office, training) reduce your taxable income before tax is applied.
  3. 3. Income tax. Applied to revenue minus expenses, using the same 2024–25 brackets as PAYG.
  4. 4. Medicare levy. The same 2% on taxable income — contractors are not exempt.
  5. 5. Self-funded super. Contractors must fund their own super. The calculator lets you set the rate to compare apples-to-apples with PAYG.

The hidden costs of contracting

The biggest items PAYG employees receive that contractors do not:

  • Annual leave. Four weeks paid leave equals roughly 7.7% of gross salary — contractors must earn enough during working periods to self-fund downtime.
  • Sick leave. Ten days per year or about 3.8% of gross salary if fully used.
  • Public holidays. Approximately 10 days per year in most Australian states.
  • Employer super. 11.5% in 2024–25 — this is not from take-home, it is on top. At $120k salary, that is $13,800/year going into super.

Adding these together, a contractor typically needs to earn 20–30% more than an equivalent PAYG salary just to break even. At a $100,000 equivalent salary, the contractor break-even annual revenue is approximately $125,000–$135,000 before expenses.

What daily rate matches a $100k PAYG salary?

Assuming 48 working weeks, 5 days per week (240 days), a $100,000 PAYG salary is roughly $417/day. But to match the same take-home pay after accounting for missing super (11.5%), leave loadings, and $5,000 in business expenses, you would need approximately $570–$600/day as a contractor. The calculator above shows the exact break-even for your specific inputs.

§ Letters & replies

ABN & contracting, answered.

The questions Australians most often ask when deciding between ABN contracting and PAYG employment.

What is the difference between ABN contractor and PAYG employee?+ open

An ABN contractor (sole trader) invoices clients, manages their own tax and GST, and can claim business expenses — but receives no employer super, paid leave, or sick leave. A PAYG employee has tax withheld automatically, receives 11.5% employer super on top of salary, and is entitled to annual leave, sick leave, and public holidays.

Do ABN contractors pay less tax than PAYG employees?+ open

Both use the same progressive income tax brackets. The difference is that ABN contractors can reduce taxable income by claiming legitimate business expenses. The tax saving equals expenses × your marginal rate — so $10,000 in expenses at a 30% marginal rate saves $3,000. The net income benefit must be weighed against the cost of missing entitlements.

What daily rate do I need to match my PAYG salary?+ open

A common rule of thumb is to multiply your equivalent annual salary by 1.25–1.35 to cover missing super, leave entitlements, and income gaps between contracts. At $100,000 PAYG that is roughly $550–$600/day on a standard 48-week year. The calculator above computes the exact break-even for your figures.

Do ABN contractors pay the Medicare levy?+ open

Yes. Australian resident contractors pay the 2% Medicare levy on taxable income — the same as PAYG employees. The levy applies to gross revenue minus deductible business expenses. There is no Medicare levy exemption for contractors.

When do I need to register for GST?+ open

You must register for GST if your annual turnover reaches or exceeds $75,000. Once registered, you add 10% GST to invoices and remit it to the ATO quarterly via a Business Activity Statement (BAS). Use the GST toggle in the calculator if your quoted rate already includes GST — it will strip the 10% before the income tax calculation.

What business expenses can a sole trader claim?+ open

Common deductions include phone and internet (work portion), laptop and equipment, home office expenses (67¢/hr fixed rate or actual costs), professional subscriptions and software licences, accounting fees, professional development and certifications, and work-related travel. Expenses must be genuinely incurred in earning your income — personal items are not deductible.

Is employer super counted in the comparison?+ open

Yes — the PAYG column shows the 11.5% employer super paid on top of the gross salary. This does not reduce take-home pay; it is an additional cost the employer pays into your super fund. For a fair comparison, use the ABN super slider to match the same rate, so you can see the true net take-home difference.

Next: the bigger picture

§ 01 — Pay

Australian salary tax calculator 2026

Work out your take-home pay after income tax, Medicare levy, HECS, and super using the latest ATO brackets.

§ 07 — Property

Negative gearing tax saving calculator

See exactly how an investment property loss reduces your income tax bill at your marginal rate.

§ 06 — Energy

Solar panel ROI calculator

Calculate payback period, annual savings, and 25-year return on a rooftop solar system in Australia.