[clug] [OT] Contracting hourly rate calculation

[Dale Shaw]

Hi Chris,

On 8/23/07, Chris Henderson <henders254 at gmail.com> wrote:
> I understand that the calculation of hourly rate should include
> superannuation, annual leave, sick leave, payroll tax exempt fees
> (excld. GST) and anything else that I'm missing but I'm not sure how
> to come up with an hourly rate based on my current full-time permanent
> salary. I would also like to know about the implications of breaching
> the contract early under different circumstances.
>
> Can anyone give an example or point us to the right URL?

I can't answer the contract breach question, but here are some figures
I worked out last year when looking to change jobs:

$30/hr = $1268.35 take home per fortnight
$40/hr = $1622.33 take home per fortnight
$50/hr = $2056.31 take home per fortnight
$60/hr = $2406.30 take home per fortnight
$70/hr = $2742.77 take home per fortnight
$80/hr = $3079.23 take home per fortnight
$90/hr = $3415.70 take home per fortnight
$100/hr = $3752.17 take home per fortnight
$110/hr = $4066.68 take home per fortnight
$120/hr = $4374.39 take home per fortnight

Those figures are based on 213 working days per year (-12 public
holidays, -20 days leave, -10 days sick leave and -5 days training)
and on the following amounts coming out of your pre-tax hourly rate:

9% superannuation
3% management fee (can vary between agencies)
$3500 training/year (I should probably have this coming out post-tax)

Then income tax and the medicare levy comes out to give you the net salary.

Here's a worked example:

213 work days per year
$30/hr
$240 daily rate
$240 * 213 = $51,120.00
$51,120.00 * 9% super = $4,600.80
$51,120.00 * 3% mgmt = $1,533.60
training = $3,500
expenses = $4,600.80 + $1,533.60 + $3,500 = $9,634.40

gross salary PA = $51,120.00 - $9,634.40 = $41,485.60
tax on $41,485.60 = $7,795.68 ($2,850 plus 30c for each $1 over $25,000 **)
medicare levy = $gross salary PA * 0.015% = $622.28
net salary PA = $gross salary - $tax - $medicare levy = $33,067.64

monthly salary take home = $net salary / 12 = $2,755.64
fortnightly salary take home = $net salary / 365 * 14 = $1,268.35

** this calculation may now be out of date -- see ato.gov.au

There are probably a couple of (hopefully minor) flaws in the formula
but I found it to be pretty accurate. I'd appreciate feedback from
anyone who spots a flaw.

FWIW I ended up taking a perm job :-)

cheers,
Dale