Deductions and Net Pay
If you earned $1,500 this week but only $1,050 landed in your bank account, where did the other $450 go? Understanding deductions isn't just about maths — it's about knowing your legal rights as a worker and being able to check that the right amounts are being taken.
Practise this lesson
Three printable worksheets that build from foundations to mastery — or build your own from any module’s questions.
If you earned $1,500 this week but only $1,050 landed in your bank account, where did the other $450 go? It didn't disappear — it went to at least three different places, and your employer sent it there on your behalf before you ever saw it.
Without calculating — write your gut feeling. Who do you think is receiving those deductions, and why?
Three formulas drive every deductions and net pay question. Commit these to memory — they are the skeleton of every calculation in this topic.
$$\text{Net pay} = \text{Gross pay} - \text{Total deductions}$$
$$\text{Total deductions} = \text{PAYG tax} + \text{Super} + \text{Other deductions}$$
$$\text{Super contribution} = \text{Ordinary time earnings} \times \text{super rate}$$
Key facts
- The difference between mandatory deductions (PAYG tax, super) and voluntary deductions
- That net pay = gross pay − total deductions
- That employer super is paid on top of gross pay, not subtracted from it
Concepts
- Why net pay is always less than gross pay when deductions exist
- Why employer superannuation does not appear in the net pay calculation
- How to calculate a percentage-based deduction before subtracting
Skills
- Calculate net pay from gross pay and a list of deductions
- Calculate the employer's superannuation contribution
- Calculate total employer cost (gross pay + employer super)
Deductions are amounts subtracted from gross pay before the worker receives their take-home pay. There are two categories:
- Mandatory: PAYG income tax withheld, superannuation guarantee — law requires these.
- Voluntary: union fees, salary sacrifice super, health insurance, workplace loan repayments — the employee chooses these.
In HSC questions, deductions are almost always given to you as dollar amounts — you are asked to calculate their total and subtract from gross pay:
$$\text{Net pay} = \text{Gross pay} - \text{Total deductions}$$What to write in your book
- Net pay = Gross pay − Total deductions. Always list each deduction on its own line before summing.
- Mandatory deductions: PAYG tax, super guarantee. Voluntary deductions: union fees, salary sacrifice, health insurance.
- Employer super is paid on top of wages — it does not come out of take-home pay (unless salary sacrifice).
Quick check: An employee's gross pay is $2,400. PAYG tax is $490, union fees $22, salary sacrifice super $80. What is net pay?
The superannuation guarantee rate is 11.5% in 2024–25, rising to 12% from 2025 onwards. In HSC questions, the rate will always be stated — do not assume a rate.
Super is calculated on ordinary time earnings. The employer pays super in addition to the worker's wage — it does not come out of the worker's take-home pay unless the question specifically describes a salary sacrifice arrangement.
What to write in your book
- Employer super = Ordinary time earnings × super rate.
- Employer super is an extra employer cost, not a deduction from the employee's pay.
- Total employer cost = Gross wages + Employer super.
True or false: Employer superannuation guarantee should be subtracted from gross pay when calculating an employee's net pay.
Worked examples · 4 in a row, reveal as you go
Kofi's gross fortnightly pay is $3,240.00. His deductions are: PAYG tax withheld $712.00, union fee $38.50, salary sacrifice super $162.00. Calculate his net pay.
PAYG $712.00 + Union $38.50 + Salary sacrifice $162.00
Amara earns $1,860 per fortnight in ordinary time. Her employer pays superannuation at 11.5%. Calculate: (a) the employer's super contribution for the fortnight, and (b) the total cost to the employer.
Rhys works 38 ordinary hours at $31.50/hr and 5 hours overtime at time-and-a-half in a week. His deductions are: PAYG tax $398.00, salary sacrifice super $95.00, health insurance $42.80. Calculate his gross pay and net pay.
An employee has gross weekly pay of $1,520. Deductions from pay are PAYG tax $286.00 and union fees $14.50. Their employer also pays super at 11.5% of gross pay. Calculate: (a) the worker's net pay, and (b) the total employer cost for the week.
What to write in your book
- List deductions first, classify each as employee or employer cost, then sum only the employee deductions.
- Net pay formula: Net = Gross − Total employee deductions.
- Employer total cost = Gross wages + Employer super.
Fill the gap: A worker earns $3,400 per fortnight. Their employer pays super at 11.5%. The employer's super contribution is $.
Common errors · the 3 traps that cost marks
What to write in your book
- Before calculating, write "Deductions from employee pay:" and list only what reduces net pay.
- Net must be less than gross — if not, recheck signs.
- Employer super increases total employer cost; it does not reduce employee net pay.
Match each item to whether it reduces the employee's net pay or is an employer cost.
Look back at what you wrote in the Think First section. The other $450 went to: PAYG income tax (sent to the ATO), possibly superannuation (sent to a super fund), and possibly other deductions like union fees. None of it was lost — it was sent somewhere specific on your behalf.
What has changed? What did you get right? What surprised you?
Top 3 list: Name THREE different types of deductions that can reduce an employee's net pay.
Pick your answer, then rate your confidence — that tells the system what to drill next. Each retry pulls a fresh mix from the bank.
SA 1. A worker's gross weekly pay is $1,680. Deductions are PAYG tax $322.00 and union fees $18.00. Calculate the net pay. (2 marks)
SA 2. An employee earns $2,240 per fortnight in ordinary time. Their employer pays super at 11.5%. Calculate the employer super contribution and the total employer cost. (2 marks)
SA 3. A worker has gross pay of $1,940. Deductions are tax $388.50, salary sacrifice super $75.00, and health insurance $26.50. Calculate the net pay. (3 marks)
📖 Answers (click to reveal)
SA 1 (2 marks): Total deductions = $322 + $18 = $340. Net pay = $1,680 − $340 = $1,340.00 [1 method + 1 answer].
SA 2 (2 marks): Employer super = $2,240 × 0.115 = $257.60 [1]. Total employer cost = $2,240 + $257.60 = $2,497.60 [1].
SA 3 (3 marks): Total deductions = $388.50 + $75.00 + $26.50 = $490.00 [1]. Net pay = $1,940 − $490 = $1,450.00 [1 + 1 for method shown].
Five timed questions on deductions and net pay. Beat the boss to bank a tier — gold (90% + speed), silver (75%), or bronze (50%). Replays welcome.
⚔ Enter the arenaClimb platforms by answering questions on deductions and net pay. Pool: lessons 1–6.
Mark lesson as complete
Tick when you've finished the practice and review.