What is gross pay?
Gross pay refers to the total amount of money an employee earns before any deductions, taxes, or withholdings are taken out. It includes all forms of compensation, such as hourly wages, salary, bonuses, and overtime pay.
Gross pay is the starting point for calculating an employee’s earnings and is often used as the basis for various financial calculations.
Gross pay vs Net pay?
- Gross Pay
The total amount an employee earns before any deductions.
- Net Pay
The amount an employee receives after deductions, taxes, and withholdings have been subtracted from their gross pay. Net pay is the actual amount that is deposited into the employee’s bank account.
Deductions from gross pay
Deductions are amounts taken out of an employee’s gross pay before they receive their net pay. Deductions can include:
- Income Tax
The amount withheld by the government based on the employee’s tax bracket and tax declarations.
- Medicare Levy
A compulsory levy used to fund the Australian healthcare system.
- Superannuation Contributions
Mandatory contributions to a retirement savings fund (superannuation) by both the employee and the employer.
- Union dues
Membership fees for labour unions.
- Voluntary deductions
Deductions that the employee has chosen, such as salary sacrifice arrangements for additional superannuation contributions or other benefits.
How to calculate gross income?
To calculate gross income, add up all the forms of compensation an employee receives during a specific period, such as weekly, biweekly, monthly, etc., which may include:
- Hourly wages/salary
Regular pay based on hourly rates or an annual salary.
- Overtime pay
Additional pay for hours worked beyond the regular working hours.
- Bonuses and incentives
Extra earnings based on performance, productivity, or special achievements.
Payments for specific expenses or conditions, such as travel or uniform allowances.
How Workstem assist you on payroll?
Simplify your payroll management with Workstem’s automated payroll system. We handle easy payroll by integrating employment information, attendance, leave, payroll, tax, superannuation and more into one master file.
By automating the payroll process in accordance with Fair Work and EBAs, Workstem simplifies tasks such as gross pay, overtime pay, allowances, loadings, and leave cashing out. The STP 2 reporting feature also enables businesses to comply with ATO.
Keep track of compliant payroll processing at its finest with Workstem, boosting efficiency and eliminating the need for tedious manual operations. Join us today!