Locum Pay Calculator: PAYG vs ABN for Doctors in Australia
The popular belief that "going ABN pays more" is usually false once you compare the same locum work like-for-like. A PAYG rate has 12% super paid on top plus (often) paid leave; an ABN rate has to fund super, leave, your own indemnity and admin out of the headline figure — and both are taxed at the same marginal rates. This tool adds those costs back so you compare total value, not headline rate.
Like-for-like comparison
PAYG total value
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cash + super, at your rate
ABN total value
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after own costs & super
Break-even ABN rate
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to match PAYG like-for-like
| At your rate, per year | PAYG employee | ABN sole trader |
|---|
Both sides use the same headline rate and the same FY2026–27 marginal tax + 2% Medicare levy — there is no lower "contractor rate" for a solo locum (PSI). Super is treated as retirement value on both sides: paid on top for PAYG, self-funded from the rate for ABN (unless s12(3) applies). Indemnity and admin are deducted on the ABN side and treated as employer-covered on the PAYG side.
What this comparison assumes (read before trusting it)
- Super is real value, not a tax. For PAYG, 12% Super Guarantee is paid on top of your rate — it never comes out of the quoted figure. For ABN in the simple case there's no employer super, so to compare fairly the tool sets aside the same 12% from the rate as self-funded retirement money. That's why the ABN "cash" line is lower: some of the same gross has been reclassified as super. The s12(3) super trap: an ABN does not switch off super — a contract wholly or principally for your personal labour makes the payer liable anyway, so the assumed "ABN saves super" advantage often doesn't even exist. Use the toggle if your payer pays it. This tool is deliberately conservative on the ABN side: it funds that 12% from after-tax cash. A sole trader who instead makes a deductible concessional super contribution (up to the ~$30,000 cap) gets part of it pre-tax and would break even at a slightly lower ABN rate than shown.
- PSI, not company tax planning. A solo locum's income is Personal Services Income: taxed to you at marginal rates whatever entity you invoice through, no company-rate profit retention, no spouse income-splitting, and deductions broadly capped at employee level. Both sides here are taxed on the identical FY2026–27 brackets.
- GST is usually not a pay lever. Most clinical locum work is GST-free (public-hospital and Medicare-benefit carve-outs), so ABN registration mostly adds BAS admin rather than income. But the $75,000 threshold is on total turnover, and billing a private medical centre under a service-fee arrangement can be a taxable supply — so GST is a compliance issue to check, not modelled as a number here.
- Leave is only partly modelled. The "weeks worked per year" input captures unpaid time off (fewer weeks = lower annual figure on both sides). It does not add a separate paid-leave loading to the PAYG side, so if your PAYG role includes paid annual/sick leave or a casual loading, PAYG is worth a little more than shown.
- Not modelled: agency margins (the same shift pays differently booked through an agency), workers' compensation, income-protection insurance, the discipline cost of actually contributing your own super, quarterly PAYG-instalment cash-flow timing, and the low-income Medicare-levy reduction (a flat 2% is applied). Rate figures are indicative; the tax, super, PSI and GST rules are the reliable part.
FAQ
Does going ABN as a locum pay more than PAYG?
Usually not, once you compare like-for-like. A PAYG rate has 12% super paid on top and often paid leave; an ABN rate has to fund super, leave, your own indemnity and admin out of the headline figure. Both are taxed at the same personal marginal rates — there is no lower contractor tax rate for a solo locum. After you add super, leave and your own costs back in, PAYG and ABN usually land close together. ABN buys flexibility and control, not a tax windfall.
Doesn't holding an ABN switch off super?
No. Under section 12(3) of the Superannuation Guarantee (Administration) Act 1992, a contract that is wholly or principally for your personal labour makes the payer liable to pay 12% super — even though you hold an ABN and invoice. A solo locum engaged to personally provide clinical services usually fits this test, so many ABN locums are in fact owed super by the hospital, agency or medical centre anyway. Don't assume ABN means no super; check whether it is being paid, and whether a 'super-inclusive' rate is really pay.
Can I use a company or trust to pay less tax or split income with my spouse?
Almost never as a solo locum. Your income is Personal Services Income (PSI): it is attributed back to you and taxed at your marginal rates whatever entity you invoice through. You generally cannot leave clinical profit in a company at the company tax rate, cannot split income to a lower-taxed spouse or family entity, and your deductions are broadly limited to what an employee could claim. The company-and-trust tax planning other business owners use largely does not work for a solo locum.
Do I have to charge GST on my locum invoices?
Usually not on the clinical service itself — most medical services are GST-free, and supplies to public hospitals and Medicare-benefit work are covered by specific carve-outs. But the $75,000 registration threshold is measured on your total turnover including GST-free supplies, so a busy locum often still has to register (mainly to claim input tax credits and lodge a BAS). The main case where GST is genuinely charged is billing a private medical centre under a service-fee arrangement. Get your specific arrangement checked.
Sources & methodology
- ATO — super for independent contractors (the s12(3) SGAA labour-contract rule that keeps super on the payer even for an ABN) and key super rates (12% from 1 July 2025).
- ATO — Personal Services Income (PSI) (attribution to the individual, employee-level deductions, no income-splitting) and GST and health: medical services (GST-free supplies; the $75,000 total-turnover test).
- ATO — individual income tax rates (2026–27). Tax and HELP mirror this site's take-home pay calculator exactly, so the two never disagree.
- A comparison, not advice: rate figures are indicative (RMO ~$80–160/hr, registrar ~$100–199/hr, consultant ~$232/hr average, ED FACEM ~$180–250/hr; see Messly's PAYG/ABN breakdown). This is general information, not tax advice — confirm your specific arrangement with a medical-specialist accountant.
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