Whether you’re an employee trying to understand your payslip or a business owner managing payroll, understanding gross income is a fundamental part of financial literacy in Australia. It’s the starting point for calculating everything from your take-home pay to your tax obligations and superannuation entitlements.

This guide will demystify gross income, distinguishing it from net and taxable income, outlining its components, and providing the latest information from the Australian Taxation Office (ATO).

What is Gross Income?

Gross income is the total amount of money you earn from all sources before any deductions, taxes, or expenses are taken out. For an employee, this is your total salary and wages. For a business, it’s the total revenue generated from sales before subtracting the costs of operation.

Understanding this figure is crucial for budgeting, applying for loans, and ensuring your employer is compensating you correctly.

 

Gross Income vs. Net Income

This is one of the most important distinctions you can make.

  • Gross Income: The full amount you earn.
  • Net Income: The money you actually “take home” after all deductions have been made.

The formula is simple: Gross Income – Deductions = Net Income

Deductions can include:

  • Income tax
  • Superannuation contributions
  • Student loan repayments (e.g., HECS-HELP)
  • Voluntary salary sacrifices (e.g., for extra superannuation)
  • Health insurance premiums

For example, if your gross annual salary is $80,000, but taxes, super, and other deductions total $20,000, your net (take-home) income would be $60,000.

What is Included in Gross Income?

Your gross income is made up of all assessable income sources. In Australia, this can include:

  • Salary and Wages: Your regular pay, as well as overtime, bonuses, allowances, and commissions.
  • Self-Employment Income: All income earned from your business, before subtracting business expenses.
  • Investment Income: Interest from savings accounts and dividends from shares.
  • Rental Income: Money received from renting out a property.
  • Government Payments: Assessable payments from Centrelink or other government bodies.

 

Gross Income vs. Taxable Income

While often confused, gross income and taxable income are not the same thing.

  • Gross Income: The total amount you earn from all sources.
  • Taxable Income: The amount of money you are actually required to pay tax on.

Your taxable income is calculated by subtracting your allowable deductions from your assessable income (your gross income).

For example, if your gross salary is $100,000 and you have $5,000 in allowable work-related deductions (like car expenses or professional fees), your taxable income would be $95,000. The ATO will use this figure to calculate your income tax liability.

Australian Essentials: Superannuation & Health Insurance (ATO Updates 2025)

Superannuation Guarantee (SG)

  • Updated Rate: The Superannuation Guarantee (SG) rate, which is the minimum your employer must contribute to your super fund, is now 12% of your ordinary time earnings as of 1 July 2025. This is an increase from the previous 9.5% mentioned in the old blog post.
  • Does it Affect Gross Income? An employer’s mandatory superannuation contribution is separate from your gross salary. However, any additional voluntary contributions you make through salary sacrifice are deducted from your gross income.

 

Private Health Insurance Rebate

  • The rebate is not a deduction from your gross income. It is an income-tested rebate from the government that helps to reduce the cost of your private health insurance premiums.
  • You can receive the rebate as a reduction on your premiums or as a tax offset when you lodge your annual tax return. The amount of the rebate depends on your income and age.

 

Gross Income vs. Gross Profit

This distinction is important for businesses and self-employed individuals.

  • Gross Income: The total revenue earned from all sources.
  • Gross Profit: The revenue a business earns after subtracting the cost of goods sold (COGS). This is a crucial metric for business performance.

 

Simplify Payroll and Stay Compliant with EmployeeConnect

Managing gross income, calculating superannuation, and ensuring all taxes and deductions are handled correctly can be complex and time-consuming. This is where a modern HRIS becomes essential.

EmployeeConnect offers a comprehensive payroll and HR solution that takes the guesswork out of these crucial tasks. Our platform helps you:

  • Stay Compliant: Our software is updated with the latest ATO rules, including the new superannuation rate, so you can rest assured your calculations are always accurate.
  • Simplify Payroll: Automatically calculate gross income, process all deductions, and manage superannuation contributions with real-time accuracy.
  • Save Time: Our intuitive interface streamlines payroll, so you can spend less time on manual administration and more time on strategic business decisions.

 

Don’t let payroll complexity hold you back. Let us help you simplify. Contact us today to learn more about our payroll and HR solutions.