nz_contractor_vs_employee_calculator
Compare contracting with salaried employment in New Zealand, on what is actually kept.
Use for: 'should I go contracting', 'contractor rate vs salary', 'what rate
do I need to match my salary', 'is contracting worth it NZ'.
ALMOST EVERYONE COMPARES THE TWO HEADLINE NUMBERS AS THOUGH THEY WERE THE
SAME KIND OF NUMBER. They are not. An employee's package includes things a
contractor has to fund out of the rate:
- Employer KiwiSaver, at least 3.5% from 1 April 2026, less ESCT. A
contractor gets no match, so the same percentage costs them all of it.
- Annual leave, ten sick days and eleven public holidays. Around 45 of
the 260 working days in a year.
- The ACC work levy, which an employer pays and a contractor does not.
SO TWO COMPARISONS COME BACK. cash_difference is take-home against
take-home, and it is the one that FLATTERS CONTRACTING because it ignores
all of the above. package_difference is the honest one. It is common for a
contract to be well ahead on cash and behind on package. If you quote only
the first you have given bad advice, so quote both and say which is which.
breakeven_contract_income answers the question people actually have, which
is what they need to charge to be no worse off. Lead with it when someone
is deciding on a rate.
annual_contract_income is the year's TOTAL invoicing, not a rate to be
multiplied up. billable_weeks only expresses the implied weekly and daily
rate.
GST is excluded: over $60,000 of turnover registration is compulsory, but
GST is collected and passed on rather than earned. Also worth saying out
loud, because it has no dollar figure and is not nothing: an employee has
notice periods and personal grievance rights, and a contractor does not.
Args:
annual_gross_salary: The salaried offer, gross.
annual_contract_income: Total expected to invoice for the year, GST exclusive.
annual_business_expenses: Deductible expenses for the year.
billable_weeks: Weeks expected to bill. Used only for the implied rate.
acc_work_levy_pct: ACC work levy as a percentage. Varies a lot by industry.
employer_kiwisaver_rate_pct: Employer contribution, minimum 3.5%.
own_kiwisaver_rate_pct: Their own rate, applied to both sides.
annual_leave_days: Annual leave in the employment offer.
has_student_loan: Applies to both sides.
claim_ietc: Whether the independent earner tax credit is claimable.
Returns:
Both sides costed line by line, the difference on cash and on package,
which wins on each, and the breakeven contract income.
Input Schema
TableJSON Schema
| Name | Required | Description | Default |
|---|---|---|---|
| claim_ietc | No | ||
| billable_weeks | No | ||
| has_student_loan | No | ||
| acc_work_levy_pct | No | ||
| annual_leave_days | No | ||
| annual_gross_salary | Yes | ||
| annual_contract_income | Yes | ||
| own_kiwisaver_rate_pct | No | ||
| annual_business_expenses | No | ||
| employer_kiwisaver_rate_pct | No |