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Home/Blog/Medicare & Other/What is the difference between gross pay and net pay in Australia?
Medicare & Other·21 July 2025·2 min read

What is the difference between gross pay and net pay in Australia?

Gross pay is what you earn before deductions. Net pay is what you actually receive. Here is how the two relate to your tax situation.

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Quick answer

Gross pay is the total amount you earn before any deductions. Net pay is what actually goes into your bank account after deductions. For working holiday makers, the main deduction is PAYG tax withholding at 15% of gross pay (with your TFN on file).

How do gross and net pay appear on your payslip?

A standard Australian payslip shows:

  • Gross pay: total earnings (hours × rate + allowances + penalty rates + overtime)
  • Tax withheld: PAYG deducted from gross pay
  • Net pay: gross pay minus tax withheld = what you receive
  • Super: shown separately (paid by employer on top, not deducted from your pay)

Example for a working holiday maker:

  • Gross pay: $1,000
  • Tax withheld at 15%: $150
  • Net pay: $850
  • Super (12% on top): $120 paid to your fund

Why is super not a deduction from gross pay?

This is a common point of confusion. Super is:

  • Paid by your employer on top of your wages
  • An additional cost to the employer, not a deduction from you
  • Shown as a separate line item on your payslip
  • Calculated as 12% of your gross wages (from 1 July 2025)

When you earn $1,000 in gross wages, you receive $850 in your bank account AND $120 goes into your super fund. Your gross pay does not change because of super.

If your payslip shows super being subtracted from your gross pay, that is incorrect. Raise it with your employer immediately, and contact our team if not resolved.

Why does gross pay matter for tax?

Tax returns and income statements always use gross pay:

  • When we declare your income for the year, we use the gross figure
  • The ATO uses gross pay to calculate your tax liability
  • Tax withheld is shown separately
  • Net pay is irrelevant for tax purposes

So when you receive your income statement at year-end, the figure shown is your total gross wages, not what landed in your bank account.

How can you check your gross pay calculation?

To verify your payslip:

  1. Multiply your ordinary hours by your hourly rate
  2. Add any penalty rates for weekend, public holiday, or evening shifts
  3. Add any allowances (uniform, tool, travel)
  4. Add any overtime hours at the correct rate
  5. Compare against the gross figure on your payslip

If the figures do not match, raise it with your employer. The discrepancy may be a payroll error or an underpayment. Get in touch with our team if you need help working out the correct rate.

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