Employee
$49,730.00
package · A$50k · PAYG · rank #1
- Take-home
- $43,730.00
- Income tax
- $5,270.00
- Medicare
- $1,000.00
- Employer SG
- $6,000.00
- Timing
- PAYG withholding each payday
Sole trader vs employee
Compare · 2026
Employee vs Sole trader
Employee (PAYG) vs Sole trader / contractor: cash $43,730.00 vs $43,730.00; package $49,730.00 vs $43,730.00 on $50,000. On $50,000, cash take-home ties at $43,730.00 (same income tax $5,270.00 + Medicare $1,000.00). Employee (PAYG) leads on package by about $6,000.00 via employer Super Guarantee $6,000.00.
Higher package on A$50k
Employee (PAYG) wins on package
Cash take-home ties at about $43,730.00. $49,730.00 vs $43,730.00, a $6,000.00 difference (employer SG gap ≈ $6,000.00).
Side-by-side scoreboard
Sole trader
$43,730.00
package · A$50k · ST · rank #2
- Take-home
- $43,730.00
- Income tax
- $5,270.00
- Medicare
- $1,000.00
- Employer SG
- $0.00
- Timing
- PAYG instalments (est. quarterly)
Key takeaways
- On $50,000, cash take-home ties at $43,730.00 (same income tax $5,270.00 + Medicare $1,000.00). Employee (PAYG) leads on package by about $6,000.00 via employer Super Guarantee $6,000.00.
- Income tax + Medicare on both sides is $6,270.00 at A$50k — the package gap is employer Super Guarantee.
- Employer Super Guarantee at 12% of gross is paid on top of salary — not deducted from take-home cash on this hub.
- Employer Super Guarantee is A$0 on this path — you must self-fund retirement savings (ATO Super Guarantee rules apply to employers of employees, not to your own trading profit).
- Income tax and Medicare are usually withheld from each payday under PAYG withholding — no PAYG instalments on this employee column.
- Usually settle income tax and Medicare via your tax return; PAYG instalments (often quarterly) may apply when ATO entry thresholds are met.
How to read Employee vs Sole trader
Both columns use the same $50,000 figure as sole-trader profit or employment gross for tax year 2026–27 (Australian resident).
Cash take-home ties. Employee (PAYG) leads on total package by about $6,000.00 — driven by employer Super Guarantee ≈ $6,000.00, not a different tax bill.
Super Guarantee package gap
Employer Super Guarantee is 12% of ordinary-time earnings for eligible employees (ATO). It is paid into super — not subtracted from the cash take-home shown here.
Sole traders do not receive employer SG on their own trading profit; retirement contributions are self-funded.
Payment timing — PAYG withholding vs instalments
Employees: income tax and Medicare are usually collected through PAYG withholding each payday.
Sole traders: the ATO may start PAYG instalments when instalment income, tax payable, and notional tax thresholds are met — often quarterly. This hub’s quarterly figure is an educational estimate from this year’s tax + Medicare bill ÷ 4, not an official ATO notice.
Contractor caveats
This hub compares tax maths and employer SG only. GST collected/remitted amounts, deductible expenses, company structures, HELP, MLS, and private health insurance are excluded.
Employment status (employee vs contractor) is a legal/ATO question — this vignette does not decide status.
Official rules behind this compare
Income tax (2026–27 resident)
- Tax-free threshold $18,200 for residents in this engine
- Same resident band schedule applies to employment income and sole-trader trading profit on this hub
- Low Income Tax Offset (LITO) is included in the engine where it applies
Medicare levy
- Standard levy 2% of taxable income for residents
- Low-income shade-in applies in the engine
- Medicare levy surcharge and private health insurance are excluded from this hub
Super Guarantee (12%)
- Employer SG rate 12% in this engine’s constants
- Paid into super for eligible employees — not modelled as a cash deduction from take-home here
- Sole traders receive A$0 employer SG on their own trading profit in this comparison
GST registration
- Generally register when GST turnover is $75,000 or more
- Standard GST rate 10% (ATO) — for education only
- This hub flags registration likelihood; it does not model GST collected or remitted
Starting PAYG instalments
- ATO entry factors include instalment income ≥ $4,000
- Tax payable ≥ $1,000
- Notional tax ≥ $500
- Hub quarterly estimate = (income tax + Medicare) ÷ 4 when income and tax-payable thresholds are met — educational only
PAYG withholding
- Employers usually withhold from each payday for employees
- Employee column on this hub shows A$0 PAYG instalments — withholding timing instead
Profit ladder — package gaps
| Profit / gross | Employee pkg | Sole trader pkg | Gap | GST |
|---|---|---|---|---|
| $20,000 | $22,400.00 | $20,000.00 | $2,400.00 | — |
| $30,000 | $32,331.10 | $28,731.10 | $3,600.00 | — |
| $40,000 | $41,305.00 | $36,505.00 | $4,800.00 | — |
| $50,000 | $49,730.00 | $43,730.00 | $6,000.00 | — |
| $60,000 | $57,580.00 | $50,380.00 | $7,200.00 | — |
| $80,000 | $73,480.00 | $63,880.00 | $9,600.00 | Likely |
| $100,000 | $89,480.00 | $77,480.00 | $12,000.00 | Likely |
Myths vs facts
“Sole traders always take home less cash than employees.”
On this A$50k vignette cash take-home ties at $43,730.00 — income tax and Medicare match. The employee’s advantage is employer Super Guarantee in the package ($49,730.00 vs $43,730.00).
“Employer Super comes out of my take-home pay.”
On this hub, employer SG is modelled on top of gross — it raises total package without reducing the cash take-home column. (Salary packaging / salary sacrifice is a different choice and is excluded.)
“Sole traders never deal with GST under A$100k.”
ATO GST registration generally applies from $75,000 GST turnover — not A$100k. This vignette flags likelihood when profit ≥ that threshold (expenses = 0).
“PAYG instalments are the same as employee withholding.”
Employees usually have PAYG withholding each payday. Sole traders may pay PAYG instalments (often quarterly) toward an expected annual bill — different cash-flow timing even when the annual tax maths match.
“Company structures and expenses don’t matter.”
They can change the commercial result a lot. This hub excludes companies, trusts, deductible expenses, HELP, MLS, and PHI so the equal-profit tax + SG comparison stays readable.
Exclusions
- HELP / HECS compulsory repayments
- Medicare levy surcharge and private hospital cover
- Deductible business expenses and the small business income tax offset detail on the headline vignette
- GST amounts collected and remitted (registration likelihood only)
- Company, trust, and partnership structures
- Salary sacrifice / concessional super elections beyond employer SG display
- Employment status determinations (employee vs contractor)
FAQ
Employee (PAYG) by about $6,000.00 ($49,730.00 vs $43,730.00). Cash take-home ties.
No — cash take-home ties at $43,730.00 after the same income tax and Medicare on this vignette.
Employees receive employer Super Guarantee at 12% of gross (ATO). Sole traders have A$0 employer SG on trading profit and must self-fund.
GST registration is likely when GST turnover reaches $75,000 (ATO). Employees usually face PAYG withholding each payday; sole traders may enter PAYG instalments (often quarterly) when ATO thresholds apply.
Related
Switch paths
Compare sole trader vs employee
Same $50,000 profit/gross — Super Guarantee + PAYG timing.
Validation notes
- A$50k income tax matches on both paths: $5,270.00.
- A$50k Medicare matches: $1,000.00.
- A$50k cash take-home ties: $43,730.00.
- A$50k employer SG: employee $6,000.00; sole trader A$0.
- A$50k package: employee $49,730.00; sole trader $43,730.00.
- GST flag false at A$50k/A$60k; true at A$80k/A$100k (threshold $75,000).
- Same Australia tax engine as the live calculator (resident, no HELP).
By Sammy S. · Founder · AuthorUpdated for 2026