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Calculate net pay by identifying and subtracting deductions correctly, including PAYG tax, super, and other withholdings.
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. 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. Before we calculate anything, think: who do you think is receiving those deductions, and why?
Type your initial response below — you will revisit this at the end of the lesson.
Write your initial response in your book. You will revisit it at the end of the lesson.
Come back to this at the end of the lesson.
Wrong: Net pay is calculated before tax is deducted.
Right: Net pay = gross pay minus all deductions, including income tax, Medicare levy, superannuation contributions, and any voluntary deductions.
Core Content
Deductions are amounts subtracted from gross pay before the worker receives their take-home pay — some are legally required, others are voluntary.
There are two categories of deductions:
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 to find net pay. The formula is simply:
$$\text{Net pay} = \text{Gross pay} - \text{Total deductions}$$Superannuation is a legislated system requiring employers to contribute a percentage of each worker's earnings into a retirement fund.
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, which generally means the base wage or salary. 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.
Once gross pay is known, net pay is found by identifying and summing all deductions, then subtracting — a straightforward process if the components are clearly organised.
A typical HSC net pay question will give:
Work through these steps:
| Component | Description | Example ($75,000 gross) |
|---|---|---|
| Gross Income | Total earnings before deductions | $75,000 |
| Income Tax | Tax withheld by employer (PAYG) | −$16,342 |
| Medicare Levy | 2% of taxable income | −$1,500 |
| Superannuation | Employer contribution (not deducted from pay) | $8,250 |
| Net Pay | Take-home amount | $57,158 |
Write one sentence summarising the main mathematical idea of this section.
The safest way to handle deduction questions is to separate what affects the worker's pay from what is simply an employer cost.
Before you calculate, sort each value into one of these two groups:
This one step prevents the most common mistake in the opening lesson of Managing Money: treating employer-paid super as if it were money taken out of the employee's wages.
Write one sentence summarising the main mathematical idea of this section.
Worked Examples
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.
Write one sentence summarising the main mathematical idea of this section.
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.
Write one sentence summarising the main mathematical idea of this section.
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.
Write one sentence summarising the main mathematical idea of this section.
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.
Write one sentence summarising the main mathematical idea of this section.
Look back at what you wrote in the Think First section. What has changed? What did you get right? What surprised you?
A deductions and net pay problem requires you to analyse data, perform calculations, and interpret the result in context. Show all working and justify each step.
Check Your Understanding
Select the best answer for each question. Feedback appears after you choose.
5 random questions from a replayable lesson bank — feedback shown immediately
A worker's ordinary fortnightly earnings are $3,400. Their employer pays super at 11.5%. What is the employer's super contribution?
Gross weekly pay is $1,756.00. After all deductions, net pay is $1,218.40. What is the total amount deducted?
Which amount should usually NOT be subtracted when calculating net pay?
These questions focus on the key skill in this lesson: deciding what should be subtracted and what should not.
A worker's gross weekly pay is $1,680. Deductions are PAYG tax $322.00 and union fees $18.00. Calculate the net pay.
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.
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.
Scale the platforms using your knowledge of deductions and net pay calculations. Pool: lessons 1–6.
Use this to lock in the core pattern: classify, add deductions, then subtract from gross if needed.
Which formula correctly gives net pay?
A worker has gross pay $1,300 and deductions $245. What is net pay?
Which is an example of a voluntary deduction?
Why is employer super usually not part of the net pay calculation?