1. What is the Permanent to Contract Rate Conversion?

The Permanent Salary to Contract Rate conversion calculates an equivalent hourly contract rate that would provide similar earnings to a permanent salary in Australia, accounting for factors like leave entitlements and superannuation.

2. How Does the Calculator Work?

The calculator uses the standard Australian conversion formula:

Where:

• 1840 — Standard working hours per year (46 weeks × 40 hours)
• 1.3 — Factor accounting for leave entitlements, superannuation, and other benefits

Explanation: This conversion helps contractors set rates that maintain similar earnings to permanent positions when considering all benefits.

3. Importance of Accurate Rate Calculation

Details: Proper rate calculation ensures contractors are adequately compensated for lost benefits like paid leave, sick days, and employer super contributions.

4. Using the Calculator

Tips: Enter your current or desired permanent salary in AUD per year. The calculator will show the equivalent contract rate in AUD per hour.

5. Frequently Asked Questions (FAQ)

Q1: Why is the 1.3 multiplier used?
A: The 1.3 factor accounts for lost benefits (annual leave, sick leave, superannuation) and additional costs contractors face.

Q2: Is this calculation specific to Australia?
A: Yes, this formula uses Australian standards for working hours and benefits. Other countries may use different multipliers.

Q3: Should I charge exactly this rate?
A: This is a guideline. Your actual rate may vary based on market demand, skills, experience, and business expenses.

Q4: What about GST?
A: This calculation doesn't include GST. If you're GST-registered, you would charge this rate plus 10% GST.

Q5: How accurate is this conversion?
A: It provides a good estimate but individual circumstances may vary. Consider consulting a financial advisor for precise calculations.