Day rate to equivalent salary.
Equivalent permanent salary
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Gross annual contract income
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What a day rate really has to cover
When a recruiter dangles a $800 day rate at you, the instinct is to multiply by five and call it a $4,000 week. That number is real cash, but it is not comparable to a salary. A permanent employee gets 12 percent superannuation paid on top of their wage, four weeks of annual leave plus public holidays and sick days that still pay, and usually a layer of insurance and training the employer quietly funds. A contractor gets none of that wrapped in. Every dollar of leave, every gap between gigs, and the whole super contribution comes out of the headline rate.
This tool exists to strip the headline back to something you can hold next to a job ad. It annualises the rate over the days you actually invoice, then backs out the superannuation that a permanent package would have added separately, leaving an equivalent base salary. It is built for IT contractors, freelance project managers, consultants, and tradies weighing a contract against a permanent offer, and for anyone deciding what rate to quote so they are not quietly going backwards.
The maths behind the equivalent salary
The calculator does two steps. First it works out gross contract income as the day rate multiplied by billable days. Then, because a permanent role pays super of 12 percent in addition to base salary, it treats the gross as a total package and divides by 1.12 to find the salary an employer would have to advertise to leave you in the same position. The leftover 12 percent is the super you now have to fund yourself out of that gross.
An $800 a day contract, unpacked
Take the default inputs: $800 a day across 220 billable days. That is roughly 44 working weeks once you carve out four weeks of unpaid leave and a fortnight of public holidays and slow periods. Here is how the figure resolves.
| Step | Amount |
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So $800 a day on 220 days is not a $176,000 job. It is closer to a $157,000 salary once you set aside the super you must now pay yourself. The other $18,857 is your own 12 percent contribution sitting inside the gross. Drop your billable days to 200 because a contract ended early, and the same rate equates to a lower salary again.
Where contractors get the rate wrong
The most common mistake is forgetting that the equivalent salary is still pre-tax and still has to absorb the costs an employer used to swallow. Your income protection insurance, professional indemnity cover, laptop, software licences, accountant fees, and any training all come out of that $157,000 now, and they are deductible but not free. A genuinely comparable rate often needs to sit 15 to 25 percent above salary divided by working days, not the naive figure most people reach for.
A practical tip from running contractor budgets: open a separate account and sweep the super portion into it the moment each invoice clears, then pay it into your fund before the quarterly deadline. Contractors who leave super as a vague intention rarely make the full 12 percent contribution, and the concessional cap of $30,000 a year is the most tax-effective home for it.
Do I charge GST on top of my day rate?
If your contracting turnover is above $75,000 a year you must register for GST and add 10 percent to your invoices, which you then remit to the ATO. The day rate in this tool is the GST-exclusive figure, so quote $800 plus GST, collect $880, and keep the comparison clean. GST is not your income, so never count it as part of your equivalent salary.
Does the equivalent salary include leave loading?
No. The tool compares against a plain base salary plus super. Leave loading, bonuses, share schemes, and salary-sacrifice perks in a permanent role are extra value on the employee side, so if the job you are weighing offers them, the contract needs to clear the calculated salary by a further margin to truly match.