Estimate your take home pay
Your take home pay will depend mainly on three things:
- Your pay cycle
- The amount of tax you pay
- Money paid by your employer into your super fund
There are some calculators available online to help you estimate what your take home pay will look like – but in essence you can get a rough estimate by taking your annual salary, subtracting the annual amount of tax you’ll pay (see relevant section below), subtracting any money paid into super that is counted within your gross pay, subtracting any additional levies you might need to pay, such as HELP debt and then dividing this out to match your pay cycle.
- Pay period: Dates/ time period your payslip refers to
- Pay cycle: This is how frequently you get paid. There’s no standard pay cycle. It differs from company to company
- Total ordinary hours: Relates to the hours you agreed to in your contract e.g. full-time tends to be 37.5 - 40 hours a week
- Overtime: You may get paid for working overtime, but don’t count on it. Check your contract to make sure
- Gross pay (before tax): Amount you’ve earned before deductions are taken out
- Net pay (after tax) Amount that’s paid into your bank account once deductions (including HELP) are taken out. Often called ‘take home pay’
- PAYG: Pay-as-you-go (PAYG) tax is withheld every time you’re paid.
Australia has a tax-free threshold, which means that you can earn up to a certain amount of yearly income without paying tax – in the 2015-16 tax year this was $18,200.
You will only claim the tax-free threshold from your primary job (the one that earns the most).
After that for each dollar you earn in a certain bracket, you pay a portion to the government in income tax. These brackets and rates can change over time, so the best place to check for up-to-date information is the ATO’s Individual Income Tax Rates page.
You can get an estimate of how much tax you’ll pay each year with the ATO’s simple tax calculator.
For example, if you had a taxable income of $60,000 in the 2015/2016 year you’ll have paid around $11,0471 in income tax, in addition to a Medicare levy of $1,200 (2% of your taxable income).
The Medicare levy is applied unless your income is below a certain amount.
It’s also worth knowing if you earn above a certain amount and don’t have private health insurance you’ll have to pay a Medicare Levy Surcharge.
Got a HELP debt (formally HECS)? If you earn over a certain amount ($54,8692 in 2016/17) you’ll see a percentage of your pay diverted back to the government which goes towards paying off your debt.
Super: At the time of writing your employer must pay 9.5% of your ordinary hours’ earnings into your super account.
It’s important to note that each employment contract is different, so it’s worth knowing when you are negotiating whether payments by your employer to your super are counted as part of your package, or whether super is paid on top of the dollar figure quoted in your contract.
- If your super is paid as part of your gross salary then if compulsory super contributions rise in the coming year, you may see your take home pay impacted. It’s worth considering this when you are negotiating your starting salary
- Check your super contributions are actually going into your super fund account. Don’t assume they are just because your payslip says so.
Negotiating your pay?
Once you’ve been in your role for a period, you may have a pay review. In this instance it’s worth calculating ahead of time what a 3% or 5% rise will look like to your take home pay, for instance, so you can get a real feel for what’s on the table.
Most Aussies get four weeks annual leave as well as public holidays, but it really does depend on your contract and your ordinary hours of work. Double-check what you signed.
You’ll probably see the number of hours or days you’ve accrued, and used, on your payslip.