Sales Commission Calculator

How sales commissions work in Australia

Sales commissions are a variable component of compensation paid to salespeople based on the revenue or profit they generate. In Australia, commissions paid to employees are treated as ordinary time earnings for superannuation guarantee purposes, meaning the employer must pay super on top of the commission amount at the prevailing rate (11.5% in 2025-26). For contractors, commissions are invoiced separately and may attract GST if the contractor is registered.

Common commission structures include flat rate (a single percentage on all sales), tiered or accelerator models (where the rate increases after hitting quota thresholds), and draw-against-commission arrangements. Tiered models are popular because they incentivise reps to exceed targets - the marginal rate on above-quota sales is higher, rewarding the behaviour that drives growth.

When modelling commission costs, it is important to distinguish between the commission rate and the effective rate. A tiered structure with 5% on the first $50,000 and 10% above may have an effective rate of 7.5% on $100,000 in sales - useful for budgeting total comp expense. The annualised projection helps forecast full-year commission payouts from a single period's performance.

How to use this sales commission calculator

1. Flat rate mode: Enter total sales revenue and commission percentage. The calculator shows total commission, effective rate, and annualised projection.
2. Tiered mode: Add up to five tiers with revenue thresholds and escalating commission rates. See the blended effective rate and commission breakdown per tier.
3. Team mode: Enter multiple reps with their individual sales figures and rates to compare commission payouts across the team and identify top performers.
4. Toggle the super and GST options to see the full cost to the business, including the 11.5% superannuation guarantee on employee commissions.

ATO and Fair Work rules for commission-based pay

The ATO classifies commissions as assessable income, and employers must withhold PAYG tax at the applicable marginal rate. For employees on commission-only arrangements, Fair Work requires that the total pay still meets or exceeds the minimum base rate in the relevant Modern Award - commission alone does not satisfy minimum wage obligations unless the employee is award-free. The General Retail Industry Award and Real Estate Industry Award both contain specific provisions for commission-based structures. Employers must also issue pay slips showing commission amounts separately from base salary, and keep records for seven years under the Fair Work Act.

Common commission benchmarks by industry

Commission rates in Australia vary widely by sector. Real estate agents typically earn 1-3% of the sale price (higher in regional areas, lower in metro Sydney and Melbourne). SaaS and technology sales reps commonly receive 8-12% on new business and 4-6% on renewals. Wholesale and distribution businesses often pay 3-7% depending on margins. Recruitment agencies pay 10-20% of the placement fee to the consultant. Understanding these benchmarks helps businesses set competitive compensation plans that attract talent without eroding profitability.

How AP automation connects to commission payments

Commission calculations often depend on revenue figures flowing from invoices and payments. When supplier invoices or customer credit notes are delayed or miscoded, the revenue figures used to calculate commissions may be inaccurate. Automating accounts payable ensures all financial data is captured in real time, giving sales managers and finance teams a reliable base for commission calculations.