Understanding Payslips- Gross Pay

Payslips

Payslips contain a wealth of information and sometimes your employees may have questions about the calculations on their payslip. 

The guide below is split up into 3 key sections:

  1.  Payslip components- this shows you from where payslips data is pulled from your foundU platform. 
  2. Typical payslip example- we then have an example of a typical payslip example and outline how key formulas are used to calculate Gross pay and Total pay.
  3. And finally we include an example of a more detailed payslip that has an extra step for the calculations as it contains penalty rates, allowances and deductions. 
Payslip components

As foundU is an end-to-end platform, the components that go into the Payslip such as personal details, office code (paying entity) etc all pull into the payslip.

Below is an example of a typical payslip and the different components that display.

Below is a list of where this data that appears on the payslip comes from your platform (which is useful for updating purposes).

Below are the 3 key formulas used in the calculations.

True GrossTaxable Gross Pay+ non taxable allowances+ taxable allowances + entitlements

  • This figure does not display on the payslip, relevant for employees applying for loans (how much people earn actually).

Taxable Gross Pay= True Gross - Non taxable allowances - Gross Deductions - Salary sacrifice

  • This figure displays as 'Gross Pay' on the payslip.

Net Pay= Taxable Gross Pay- tax-additional tax-non taxable deductions + non taxable allowances 

  • This figure displays as 'Total Pay' on the payslip.

Calculating Gross Pay can involve a small amount of calculation, that is why the naming of Allowances and Deductions and including information such pre or post tax can be really helpful.

Below are examples of where you can see these details.

 

(See our next section for a Typical Payslip Example, and a Detailed Payslip example in the sections below) 

 

Typical Payslip

In Fred's example below, he worked 76 hours over the fortnight (and he is paid fortnightly). This is an example of Simple payslip without leave entitlements taken, allowances, deductions or salary sacrifice.

True GrossTaxable Gross Pay ($1802.49)+ non taxable allowances (0)+taxable allowances+ entitlements (0)+entitlements= $1802.42.

Taxable Gross Pay= True Gross($1802.49)+Non taxable allowances (0)-gross deductions (0)- super salary sacrifice (0)=$1802.49, this is the Gross Pay shown on the payslip.

Total Pay (Net)= $1802.42 (Taxable Gross Pay)-848 (tax)- 0 (additional tax)- non taxable deductions (0) + non taxable allowances (0)= $954.48 this is the Total Pay on the payslip.

More Detailed Payslip 
Calculating Gross Pay can sometimes involve an additional calculation because sometimes it may not be as clear from the names of the Allowances or Deductions if they are pre or post tax).

 

Fred now works 40 hours, takes leave and has allowance and deductions.

Below is a more detailed example of Fred's payslip in this example he is a Full time employee and we can see that:

  • He has taken annual leave and personal so we'll need to add that in when calculating the gross.
  • We'll also need to add in his laundry allowance, as he has a gross (pre tax) allowance, as well as 2 x Meal Allowances (non taxable).
  • He has both a gross (pre tax) deduction and a post tax deduction. So we will need to minus out the pre tax Salary packaging for his car.
  • He has chosen to do salary sacrificing and nominated an additional tax amount.

Calculating Taxable Gross Pay and True Gross

True GrossHours worked+ non taxable allowance + taxable allowance + entitlements

=(753.61+182.33+109.40=1045.34 hours worked)+70 (non taxable allowance) +(184.76+184.76=369.52 entitlements)+3=1487.86

  • This figure does not display on the payslip, relevant for employees applying for loans etc.

Taxable Gross Pay= (Total hours worked x pay rate)- non taxable allowance- gross deductions- super salary sacrifice 

=1487.76-70 (Non taxable allowance)-25 (Gross deductions)-100 (Salary sacrifice)= $1292.86

 

Calculating Total Pay (Net)

Net Pay= Taxable Gross Pay- tax - gross deductions+ non taxable allowances 

= 1292.86-608 (tax) -10 (Additional tax) - 20 (non taxable deductions) +70 (non taxable allowance)

= $724.86

  • This figure displays as 'Total Pay' on the payslip.

 

 

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