Summary
Your payslip has two tax-related deductions that most migrants find confusing — PAYG withholding (your income tax, collected progressively each pay period) and the Medicare levy (2% of your taxable income, built into the PAYG amount and not usually shown as a separate line); together they determine how much tax your employer sends to the ATO on your behalf each pay cycle
Superannuation is paid by your employer on top of your wages — it does not reduce your take-home pay — from 1 July 2025, employers must contribute 12% of your ordinary time earnings to your super fund; if your contract says “$70,000 plus super,” your employer pays $8,400 on top of your salary; from 1 July 2026, payday super requires employers to pay super at the same time as wages
Wage theft disproportionately affects migrants in Australia — check your payslip every pay period; if the amounts don’t match what you agreed, contact the Fair Work Ombudsman (fairwork.gov.au) — Australia’s workplace regulator
Your first Australian payslip can look like a foreign language. Gross pay, net pay, PAYG withholding, super guarantee, salary sacrifice, leave balances — if you come from a country where you received a simple bank transfer or cash in hand, the detail is overwhelming. Understanding your Australian payslip explained is crucial.
But understanding your payslip is one of the most important financial skills you can develop in Australia. It tells you whether your employer is paying you correctly, whether you’re being taxed at the right rate, and whether your superannuation is actually being paid.
What your employer must include on your payslip
Under Australian law, your employer must give you a payslip within one working day of paying you. This applies to full-time, part-time and casual employees. Your payslip must include:
- Employer name and ABN (Australian Business Number)
- Your name
- Date of payment and pay period covered
- Gross pay (before tax)
- Net pay (take-home amount after deductions)
- Each deduction — including tax withheld and any other deductions
- Superannuation contributions (fund name, amount contributed, period covered)
- Leave balances (annual leave, personal/sick leave) — if applicable
If any of these are missing, your employer may be in breach of the Fair Work Act.
The key lines explained
Gross pay
What it is: Your total earnings before any deductions — base salary, plus any overtime, allowances, bonuses, penalty rates or loadings.
What it does not include: Tax-free reimbursements (such as a travel allowance paid back for costs you actually incurred) and superannuation contributions made on top of your salary.
Example: If you earn AUD $70,000 per year and are paid fortnightly, your gross pay each fortnight is AUD $2,692.31 ($70,000 ÷ 26 pay periods).
PAYG withholding (tax withheld)
What it is: PAYG stands for Pay As You Go — Australia’s system of collecting income tax progressively throughout the year rather than in one lump sum at the end. Each pay period, your employer calculates the tax on your earnings and sends it to the ATO on your behalf.
Why the amount varies: The PAYG amount depends on:
- Your annual income level — higher income = higher tax rate
- Whether you claimed the tax-free threshold on your TFN Declaration — if yes, the first $18,200 of your annual income is tax-free; if no, tax is withheld at a higher rate from dollar one
- Whether you have a HELP/HECS debt (student loan from an Australian university) — an additional repayment is withheld
- Whether you have requested additional tax to be withheld
The tax-free threshold: You can only claim the tax-free threshold with one employer. If you have two jobs and claim it with both, you will be under-withheld and will owe tax at the end of the year. Claim it only with your main (highest-paying) employer.
The PAYG amount is an estimate. Your actual tax liability is calculated when you lodge your annual tax return. If too much was withheld, you receive a refund. If too little was withheld, you owe the difference.
Common migrant mistake: Not lodging a TFN Declaration with your employer — if your employer does not have your TFN, they must withhold tax at 45% (the highest rate). Lodge your TFN Declaration the day you start work.
Medicare levy
What it is: A 2% tax on your taxable income that funds Australia’s public health system (Medicare). Most Australian residents pay this.
Where it appears on your payslip: Usually nowhere — it is built into the PAYG withholding tables and included in the “Tax Withheld” amount. You will not usually see a separate “Medicare levy” line.
Medicare Levy Surcharge: High earners ($93,000+ for singles, $186,000+ for families) who do not hold private hospital cover pay an additional 1%-1.5% surcharge on top of the standard 2% levy. This is also handled through the PAYG system.
Exemptions: Temporary visa holders who are not eligible for Medicare may be entitled to a Medicare levy exemption — apply to the ATO for an exemption certificate and give it to your employer.
Superannuation (super)
What it is: Your employer’s contribution to your retirement savings — mandatory under the Superannuation Guarantee.
The rate: 12% of your ordinary time earnings (from 1 July 2025). This is paid by your employer on top of your wages — it does not come out of your take-home pay.
“Plus super” vs “package” contracts:
- “$70,000 plus super” — you receive $70,000 in wages; your employer also pays $8,400 into your super fund. Total employer cost: $78,400.
- “$70,000 package inclusive of super” — the $8,400 super comes out of the $70,000. Your actual wages are $61,600.
Always clarify which applies before accepting a job offer. The difference on a $70,000 salary is $8,400 per year.
Payday super — from 1 July 2026: A major change takes effect from 1 July 2026. Employers must now pay superannuation at the same time as wages (payday super) rather than quarterly. This means the super shown on your payslip should match the money actually reaching your super fund — no more quarterly lag.
Who is eligible: Most employees including most temporary visa holders. If you are on a working holiday visa (417 or 462), you are entitled to super but can claim it back as a Departing Australia Superannuation Payment (DASP) when you permanently leave Australia (note: DASP is taxed at 35-65% depending on your visa type).
Net pay (take-home pay)
What it is: Gross pay minus PAYG withholding, minus any salary sacrifice and any other post-tax deductions. This is the amount that lands in your bank account.
Formula: Gross pay − pre-tax deductions (salary sacrifice) − PAYG withholding − other post-tax deductions = Net pay
Leave balances
Annual leave: Most full-time employees accrue 4 weeks of paid annual leave per year (1.538 hours per week for a 38-hour week). This appears on your payslip as your current leave balance in hours or days. It accrues progressively throughout the year.
Personal/sick leave: 10 days per year for full-time employees. Used for illness, injury or to care for an immediate family member.
Long service leave: Available after an extended period of continuous service (typically 7-10 years depending on your state) — may appear on payslips of longer-term employees.
Note for casual employees: Casuals do not accrue leave — instead they receive a 25% casual loading on top of their base rate to compensate.
Other lines you may see
Salary sacrifice: A pre-tax deduction where you agree to forgo part of your salary in exchange for a benefit (extra super contributions, a novated car lease, additional leave). Reduces your taxable income.
Allowances: Additional payments for specific work conditions — tool allowance, uniform allowance, travel allowance, meal allowance. Some are taxable, some are not.
Overtime: Pay for hours worked above your ordinary hours. Usually at a higher rate (time and a half or double time depending on your award or agreement).
Penalty rates: Higher rates for work on weekends, public holidays or late at night — common in hospitality, retail and healthcare.
HELP/HECS repayment: If you studied at an Australian university and have a student loan, an additional amount is withheld each pay period based on your income level.
Australian income tax rates 2025-26
| Income | Tax rate |
|---|---|
| $0 – $18,200 | 0% (tax-free threshold) |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001 and over | 45% |
Plus 2% Medicare levy for most residents.
2026-27 update: From 1 July 2026, the 16% rate drops to 15% — saving up to AUD $268 per year for anyone earning above $18,200. This applies to the current financial year (2026-27).
Rates are for Australian residents. Non-residents do not have a tax-free threshold and are taxed at 30% on income up to $135,000.
Check your payslip every pay period
Wage theft disproportionately affects migrants in Australia. A Fair Work Ombudsman report found that hundreds of thousands of Australian workers are underpaid each year, with immigrants and temporary visa holders among the most affected groups.
What to check each pay period:
- Does the gross pay match your agreed hourly rate or salary?
- Does the PAYG withholding look correct (roughly 20-35% of gross for most salary ranges)?
- Is superannuation shown on the payslip and being paid at 12%?
- Are your leave balances increasing correctly?
If something looks wrong:
- Contact your payroll department first
- If unresolved, contact the Fair Work Ombudsman — fairwork.gov.au or 13 13 94 — free, anonymous, available in multiple languages including Hindi, Tagalog and Nepali
FAQs (frequently asked questions)
What is PAYG on an Australian payslip?
PAYG (Pay As You Go) is your income tax — withheld from your pay each period and sent to the ATO on your behalf. The amount depends on your income level, whether you claimed the tax-free threshold and whether you have a HECS/HELP debt.
Does superannuation come out of my pay?
No. Superannuation is paid by your employer on top of your wages at 12% of your ordinary time earnings. It does not reduce your take-home pay unless your contract says it is “inclusive of super.”
What is the Medicare levy?
A 2% tax on your taxable income that helps fund Australia’s public health system. It is built into the PAYG withholding amount on your payslip.
What is the tax-free threshold in Australia?
$18,200 per year — the first $18,200 of income is tax-free. Claim this with your main employer on your TFN Declaration. Only claim it with one employer.
I have two jobs — how should I handle tax?
Claim the tax-free threshold with your main (highest-paying) employer only. Use tax code “S” (secondary employment) for your second employer — otherwise you will be under-withheld and owe tax at the end of the year.
When is payday super starting?
From 1 July 2026, employers must pay superannuation on the same day as wages — not quarterly as was previously permitted.
Related guides
- What is superannuation? A guide for migrants →
- How to lodge your Australian tax return →
- How to get a Tax File Number (TFN) →
What it means for your transfers
Once your pay is landing correctly, sending money home to family in India, the Philippines, Nepal, Vietnam or anywhere else is straightforward with OrbitRemit — fee-free on major Asia-Pacific corridors, with the rate locked at confirmation.
This guide is for general information only and does not constitute tax or financial advice. Tax rates, thresholds and rules change — always verify at ato.gov.au or consult a registered tax agent for your specific situation. Last updated August 2026.
Sources: settleau.com.au — Understanding Australian Pay Slips (April 2026) | syncskills.com.au — Understanding Your Payslip in Australia 2026 (March 2026) | invoicedataextraction.com — Australian Payslip Explained (June 2026) | eduyush.com — New Migrant Tax Guide Australia 2026 (May 2026) | ATO — Tax rates 2025-26 (ato.gov.au) | Fair Work Ombudsman — Pay slip requirements (fairwork.gov.au)
