Freelancer / Contractor Pay Estimator
Translate your day rate into an annual salary, accounting for expenses, super, and unpaid leave to find your true income.
Quick Use Samples
Your Work Setup
Annual Projections
Calculate Your Recommended Rate
Recommended Hourly Rate
$89
Recommended Daily Rate
$533
Financial Summary
Based on your inputs, you're projected to generate $105,600 in gross annual revenue. After deducting $5,000 in business expenses, your taxable income is $100,600. From this, you'll need to set aside approximately $11,616 for superannuation and $23,162 for income tax, leaving you with an estimated annual take-home pay of $65,822. This is roughly equivalent to a full-time salary of $80,173 when accounting for leave and super.
Estimated Annual Take-Home Pay
$65,822
Equivalent Full-Time Salary
$80,173
This is the approximate salary an employer would pay for a similar role after accounting for leave and super.
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What is a Freelancer/Contractor Pay Estimator?
This estimator helps self-employed freelancers and contractors in Australia calculate their effective annual income. It translates a daily or hourly rate into an annual figure, while also accounting for crucial factors that permanent employees don't have to worry about, like unpaid leave, business expenses, and setting aside money for tax and super.
Behind the Formula
The calculator determines your gross annual revenue based on your charge-out rate and the number of billable weeks you work per year. It then subtracts your estimated business expenses and your own superannuation contributions to find your taxable income. Finally, it applies the relevant income tax rates to estimate your take-home pay, providing a much more realistic figure than simply multiplying your weekly rate by 52.
Expert Insights
- Your charge-out rate needs to cover more than just your time. A good rule of thumb is to calculate an equivalent full-time salary and add at least 25-30% to cover superannuation, insurance, leave, and the costs of running your business.
- The 'feast or famine' cycle of freelance work is real. It's vital to build a cash buffer of at least 3-6 months' of living expenses to see you through periods between contracts.
- Be aware of 'sham contracting'. A sham contract is when an employer deliberately disguises an employment relationship as a contracting arrangement to avoid paying employee entitlements. Know your rights and the difference between an employee and a true independent contractor.
Actionable Tips
- Open a separate bank account and automatically transfer a portion (e.g., 30-40%) of every invoice you're paid into it. This 'tax account' will ensure you have the funds ready for your BAS and income tax bills.
- Get professional and public liability insurance. This is a non-negotiable for most professional contractors and protects you and your business from financial risk.
- Use a simple accounting software to track your income and expenses. This makes it much easier to manage your finances and claim all your eligible deductions at tax time.
Real-World Examples
An IT Contractor
An IT contractor on $100/hour uses the calculator to see that after accounting for 4 weeks of unpaid leave, business expenses, and setting aside tax and super, their take-home pay is equivalent to a full-time salary of about $120,000, not the $208,000 gross figure.
A Freelance Graphic Designer
A designer learns to factor in non-billable time for admin, marketing, and client proposals. They calculate that they can only bill for about 30 hours in a 40-hour work week, and adjust their hourly rate upwards to compensate.
Forgetting to Save for Tax
A new contractor enjoys their high gross income for a year but forgets to set aside money for tax. They are hit with a surprise $30,000 tax bill from the ATO, forcing them into a payment plan and causing significant financial stress.
Glossary of Terms
Sole Trader
The simplest business structure in Australia, where an individual is legally responsible for all aspects of the business. You can trade under your own name or a registered business name.
ABN (Australian Business Number)
A unique 11-digit number that identifies your business. You need an ABN to operate as a contractor or sole trader in Australia.
PAYG Instalments
A system used by the ATO for sole traders and other business owners to pre-pay their income tax in quarterly instalments throughout the year, so they don't have one large bill at the end.