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

Gross pay is the total amount you earn before any deductions are made. Net pay is what you actually receive in your bank account after deductions. The main deduction for most employees is income tax withholding, though superannuation is sometimes misunderstood in this context.

How gross and net pay appear on your payslip

Your payslip will show your gross earnings for the pay period, which is calculated as your hours worked multiplied by your hourly rate (plus any allowances, penalty rates, or overtime). It will then show the deductions made, with income tax withholding being the primary one. The result after subtracting deductions is your net pay.

Superannuation is not a deduction from gross pay

A common point of confusion is superannuation. Superannuation is not deducted from your gross pay. It is paid by your employer in addition to your gross wages. Your gross pay and net pay figures do not change because of super. Super is a separate obligation your employer meets on top of your wages. This is why you earn $1,000 in wages AND receive $115 (or whatever the applicable rate is) in super contributions at the same time.

Why gross pay matters for tax

Your tax return and your income statement both refer to your gross pay, not your net pay. When you declare your income for the year, you declare the gross figure. The tax withheld is shown separately. The ATO uses both figures to calculate whether the right amount of tax was paid.

Checking your gross pay calculation

If you want to verify your payslip, multiply your ordinary hours by your hourly rate. Add any penalty rates for weekend or public holiday shifts. Add any allowances. The total should match the gross figure on your payslip. If it does not, raise it with your employer.

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Make sure your net pay is correct

We help working holiday makers check their tax situation and make sure the right amounts are being deducted. Get in touch and we will take a look.