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hscscience Maths Std · Y11
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Module 3 · L6 of 14 ~50 min MS-F1 ⚡ +90 XP available

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.

Today's hook, If you earned $\$1,500$ this week but only $\$1,050$ landed in your bank account, where did the other $\$450$ go? Think: who is receiving those deductions, and why?
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Recall, your gut answer first

Three printable worksheets that build from foundations to mastery, or build your own from any module’s questions.

Worksheets

Practise this lesson

Three printable worksheets that build from foundations to mastery, or build your own from any module’s questions.

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Recall, your gut answer first
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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?

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The key relationships you need to own
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Three formulas drive every deductions and net pay question. Commit these to memory, they are the skeleton of every calculation in this topic.

Employer super guarantee contributions are paid on top of wages and are not employee deductions. An agreed employee super contribution, such as salary sacrifice, can be a deduction. Use only deductions explicitly stated in the question. In these examples, the stated ordinary earnings are the qualifying earnings used for employer super.

$$\text{Net pay} = \text{Gross pay} - \text{Total deductions}$$

$$\text{Total deductions} = \text{PAYG tax} + \text{Employee salary sacrifice} + \text{Other deductions}$$

$$\text{Employer SG contribution} = \text{Qualifying earnings} \times \text{SG rate}$$

Net pay flow: gross pay minus deductions equals net pay
Employer super is paid IN ADDITION to gross pay, it does not reduce net pay unless the question describes a salary sacrifice arrangement.
Mandatory deductions
PAYG income tax withheld and superannuation guarantee, law requires these. They always reduce net pay or are an extra employer cost.
Voluntary deductions
Union fees, salary sacrifice super, health insurance, workplace loan repayments, the employee chooses these and they reduce net pay.
Employer super, different!
Employer super is paid on top of wages, it is an extra cost to the employer, not a deduction from the worker's take-home pay.
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What you'll master
Know

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
Understand

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
Can do

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)
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Key terms
DeductionAn amount subtracted from gross pay before net pay is calculated.
Net PayTake-home pay after all deductions have been subtracted from gross pay.
PAYG TaxPay As You Go income tax withheld by the employer each pay period.
SuperannuationEmployer contributions paid in addition to wages. The super guarantee rate is 12% from 1 July 2025; use a different rate only when a question specifies one.
Medicare LevyA 2% tax on taxable income that funds Australia's public health system.
Salary SacrificeA voluntary arrangement where an employee agrees to forgo part of their salary, this does reduce net pay.
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What are deductions? And the gross-to-net flow

Deductions are amounts subtracted from gross pay before the worker receives their take-home pay.

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What are deductions? And the gross-to-net flow
core concept

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:

$$\text{Net pay} = \text{Gross pay} - \text{Total deductions}$$
Migrated flow diagram: gross pay minus deductions equals net pay, as a 3-step sequence.
Identify every deduction listed before subtracting: Re-read the question and list all deductions before doing any arithmetic. Missing even one deduction produces a wrong net pay figure.
Superannuation is not always deducted from net pay: The super guarantee is an employer contribution paid on top of wages, it does not reduce the worker's net pay. However, voluntary extra super contributions (salary sacrifice) do reduce net pay. HSC questions will make this distinction clear, read carefully.

Deductions reduce gross pay to net (take-home) pay. Mandatory: income tax (PAYG) and superannuation. Voluntary: health insurance, union fees, salary sacrifice. Net pay = gross pay − total deductions.

Pause, copy the gross-to-net flow (net pay = gross pay − total deductions), the two deduction categories (mandatory: PAYG tax; voluntary: health insurance, union fees, salary sacrifice), and the net pay formula into your book.

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?

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Superannuation, employer cost vs employee deduction

We just saw that net pay = gross pay − total deductions, with deductions split into mandatory (PAYG tax) and voluntary (health...

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Superannuation, employer cost vs employee deduction
core concept

We just saw that net pay = gross pay − total deductions, with deductions split into mandatory (PAYG tax) and voluntary (health insurance, union fees). That raises a question: superannuation often appears next to deductions on a pay slip, is it actually deducted from the employee's pay, or is it an extra cost the employer pays on top? This card answers it → the 11.5% superannuation guarantee (2024–25) is an employer cost paid on top of salary; it does not reduce take-home pay unless the employee also makes voluntary salary-sacrifice contributions.

Beyond the syllabus. Employer superannuation is not itself a Mathematics Standard dot-point, and you will not be asked to calculate an employer's total on-cost for its own sake. It is here because the dot-point that is examinable, calculating net earnings after deductions, is genuinely confusing without it: you have to know which amounts come out of the worker's pay and which the employer pays on top. Learn the distinction, then expect the exam to test 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.

Use the rate given in the question: The super rate changes each financial year. Never assume 9%, 10%, or any other figure, always use what is printed in the question.
Total employer cost: From the employer's perspective, the total cost of employing someone is: gross wages + super + any employer-paid allowances. A worker on $\$60,000$ gross costs the employer approximately $\$66,900$ per year at 11.5% super ($\$60{,}000$ × 1.115 = $\$66{,}900$).

Superannuation guarantee: employer contributes 11.5% (2024–25) of gross earnings on top of salary, this is an employer cost, not a deduction from the employee’s pay. Employee contributions are voluntary deductions. Super = salary × rate.

Pause, copy the superannuation guarantee rate (11.5% of gross earnings in 2024–25), the key distinction (employer super is paid on top, it does not reduce the employee's take-home pay), and that employee salary-sacrifice contributions are voluntary deductions into your book.

True or false: Employer superannuation guarantee should be subtracted from gross pay when calculating an employee's net pay.

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Worked examples · 4 in a row, reveal as you go

Worked examples · 4 in a row, reveal as you go

Worked examples · 4 in a row, reveal as you go

PROBLEM 1 · STRAIGHTFORWARD NET PAY

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.

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List all deductions
PAYG $\$712.00$ + Union $\$38.50$ + Salary sacrifice $\$162.00$
Identify every deduction before calculating, missing one is the most common error.
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PROBLEM 2 · EMPLOYER SUPER CONTRIBUTION

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.

a
$\text{Super} = \$1{,}860 \times 0.115 = \$213.90$
Apply 11.5% to ordinary time earnings.
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PROBLEM 3 · FULL GROSS TO NET

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.

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$\text{Ordinary pay} = \$31.50 \times 38 = \$1{,}197.00$
Ordinary hours × base rate.
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PROBLEM 4 · DEDUCTIONS VS EMPLOYER COST

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.

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(a) $\text{Total deductions} = \$286.00 + \$14.50 = \$300.50$
Only subtract employee deductions from gross pay.
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Fill the gap: A worker earns $\$3,400$ per fortnight. Their employer pays super at 11.5%. The employer's super contribution is $\$$.

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Common errors · the 3 traps that cost marks

Common errors · the 3 traps that cost marks

Common errors · the 3 traps that cost marks

Trap 01
Subtracting employer super from net pay
Employer super is paid on top of wages, it is an extra employer cost. Subtracting it from gross pay to find net pay is incorrect unless the question says salary sacrifice.
Trap 02
Missing a deduction from the list
Always re-read the question and count every deduction before summing. Write each deduction on a separate line with its amount, this earns method marks and prevents omissions.
Trap 03
Net pay greater than gross pay
If your calculated net pay is larger than gross pay, you have a sign error, you have added a deduction instead of subtracting it. Always sanity-check: net < gross.

Match each item to whether it reduces the employee's net pay or is an employer cost.

  • PAYG tax withheld
  • Employer super guarantee
  • Salary sacrifice super
  • Union fees
  • reduces net pay
  • reduces net pay
  • reduces net pay
  • employer cost only
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Revisit your thinking

Look back at what you wrote in the Think First section.

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Revisit your thinking

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?

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Top 3 list: Name THREE different types of deductions that can reduce an employee's net pay.

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Show what you have learned

Multiple choice, then short answer under exam conditions.

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Multiple choice
+5 XP per correct · +25 XP all-correct

Pick your answer, then rate your confidence. That tells the system what to drill next. Each retry pulls a fresh mix from the bank.

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Short answer
ApplyBand 32 marks

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)

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ApplyBand 32 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)

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ApplyBand 33 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)

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📖 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].