🔧 Contractor Tax Estimate
💰 Breakdown
📬 Free Tax Tips
ATO updates, tax-saving strategies and sole trader guides straight to your inbox.
Contractor Tax in Australia: What You Need to Know
Working as a contractor with an ABN means you're responsible for your own tax — including income tax, GST (if applicable), and super. Unlike employees, no tax is withheld from your invoices unless you quote your ABN.
No ABN = 47% Withholding
If you don't quote your ABN on invoices, businesses must withhold 47% of your payment (the top marginal rate + Medicare). Always quote your ABN to receive your full invoice amount.
Set Aside Tax as You Go
A practical rule: set aside 30–35% of each invoice for tax. This covers income tax at 32.5% (the most common marginal rate for contractors) plus Medicare levy.
Super for Contractors
If you work under a contract that is primarily for your labour, your client may be required to pay you super at 11.5% (2024–25 rate). If you're genuinely running a business (supplying materials, tools, multiple clients), super obligations may not apply — but voluntary contributions are tax-deductible.
Estimates only. Contractor vs employee status is determined by the ATO's specific tests. Consult a registered tax agent.