Your first Aussie payslip decoded: tax, Medicare levy & that super line

Updated 5 September 2026 for the 2026–27 financial year, including Payday Super and revised tax and contribution thresholds.

When I explain an Australian payslip to someone who has moved from South Africa, the questions are usually familiar. Why is the amount in the bank different from the salary in the contract? What does Medicare have to do with tax? And where has the super gone?

The labels become easier once you separate three things: the pay you have earned, the amounts withheld or redirected, and the employer contributions going into super.

Here is how I would work through it.

Start with the salary in your contract

A contract offering $100,000 plus super is different from a $100,000 total package inclusive of super. In the first case, the cash salary is $100,000 and employer super is additional. In the second, super forms part of the quoted package, leaving a smaller cash salary.

Your payslip’s gross earnings generally show wages for the pay period before tax and other deductions. Overtime, loadings and bonuses can also form part of taxable pay, although not every payment attracts super.

Taxable income is a separate, annual calculation. It includes your assessable income, which may extend beyond your wages, less deductions you are entitled to claim. That is why the payslip alone cannot tell you your final tax bill.

PAYG is money withheld towards your tax bill

PAYG means Pay As You Go. Your employer uses the ATO’s withholding rules and your declarations to deduct an amount from each pay towards your tax.

For someone who is an Australian tax resident for the whole financial year, the standard tax-free threshold is $18,200. If you become a tax resident part-way through the year, a part-year threshold applies. Your visa and your tax residency are different questions.

Usually, you claim the tax-free threshold from one employer at a time. Give payroll an accurate tax file number declaration and tell them about relevant changes, including study-loan repayment obligations.

If you arrive part-way through a financial year, withholding can be different from the final tax payable on your actual annual income. You may receive a refund when you lodge, but it is not guaranteed. Other income, deductions and residency dates all matter.

Australia also uses marginal tax rates: different portions of income are taxed at different rates. For 2026–27, the resident rate on income between $18,200 and $45,000 is 15%, down from 16%. The next band, from $45,000 to $135,000, remains 30%. These rates exclude Medicare. See the ATO’s resident tax tables and tax-free threshold guidance.

Medicare involves two different charges

The Medicare levy is generally 2% of taxable income, with reductions and exemptions depending on income and circumstances. It will often be allowed for within PAYG withholding rather than appearing as a separate payslip deduction.

Low-income rules differ for individuals, families and eligible seniors and pensioners. Use the ATO’s Medicare levy calculator for the relevant financial year, rather than assuming one threshold applies to everyone.

If you were not entitled to Medicare for part or all of the year, you may be able to claim a levy exemption. You generally need a Medicare Entitlement Statement from Services Australia. Not having a Medicare card is not proof that you were ineligible, and a spouse’s or dependant’s circumstances can affect the exemption.

The Medicare levy surcharge is a separate charge. It can apply when your income for surcharge purposes exceeds the relevant threshold and you, your spouse or dependants do not have appropriate private patient hospital cover, subject to exemptions.

For 2026–27, the base thresholds are $105,000 for singles and $210,000 for families. The family threshold increases by $1,500 for each dependent child after the first. Above the thresholds, surcharge rates range from 1% to 1.5%, depending on income.

Income for surcharge purposes is not simply taxable income. It also includes amounts such as reportable super contributions, reportable fringe benefits and net investment losses. Salary-sacrificing to super therefore does not, by itself, move you below a surcharge income threshold.

Check that a policy is appropriate hospital cover for these rules. Extras cover alone does not meet that requirement, and you should not assume that cover held for a visa does either. The ATO’s surcharge tables explain the income tests and rates.

Super is part of your remuneration, paid into a fund

The compulsory employer contribution, called the super guarantee, is generally 12% of qualifying earnings. These are payments that count for super, including ordinary working-hours pay, all commissions and qualifying salary amounts sacrificed to super. Eligibility rules, exclusions and the maximum contribution base can affect the calculation.

The rate reached 12% on 1 July 2025. Payday Super introduced a timing change from 1 July 2026: contributions generally need to reach your fund within seven business days after payday, although longer deadlines apply in some circumstances.

Check your fund’s contribution transactions as well as the super line on your payslip. A payslip records what is owed or reported; it is not proof of receipt. The ATO explains qualifying earnings and payment deadlines.

You can also agree to salary-sacrifice additional pay into super. This redirects some of your future cash salary into retirement savings before income tax. It reduces the cash available to you now, so the decision needs to fit your budget as well as your longer-term plans.

For 2026–27, the general concessional, or before-tax, contributions cap is $32,500. Employer contributions, salary sacrifice and deductible personal contributions count together across your funds. Eligible unused caps from previous years may increase your available amount. These contributions are generally taxed at 15% in the fund, although extra tax can apply, including for some higher-income earners and excess contributions. See the ATO’s contributions cap guidance.

A worked example: Martin’s salary and super

Consider a hypothetical employee, Martin, earning a cash salary of $110,000 plus employer super in 2026–27. Assume all of his salary is qualifying earnings, he is a full-year Australian tax resident, pays the full 2% Medicare levy and has appropriate hospital cover throughout the year. He has no other income, deductions, tax offsets or study-loan repayments.

His employer’s compulsory super is $13,200, making the total salary-and-super package $123,200. Martin then arranges to salary-sacrifice $5,000 of his cash salary to super.

• His taxable salary falls from $110,000 to $105,000.
• His income tax falls by $1,500 because the sacrificed amount would have been taxed at 30%.
• His Medicare levy falls by $100.
• The additional contribution leaves $4,250 in super after $750 of contributions tax, before fees and investment movements.
• His take-home pay falls by $3,400 over the year, while his super receives that additional $4,250.

The combined tax difference is $850 under these assumptions. This is not $850 extra spending money: Martin has exchanged current take-home pay for more money in super. His employer super remains $13,200, and employer super plus salary sacrifice totals $18,200 before contributions tax.

No surcharge saving is assumed. His income for surcharge purposes remains $110,000 because the $5,000 salary sacrifice is added back. Different circumstances, including Medicare eligibility or hospital cover, would change the outcome.

A few checks before you file the payslip away

• Gross earnings: check your hours, salary, overtime and allowances against what you expected.
• PAYG withholding: confirm payroll has your tax file number and correct declarations.
• Salary sacrifice and other deductions: check the amounts match what you agreed.
• Net pay: match the payment to your bank account.
• Employer super: check both the amount and its receipt by your fund.

For South African expats, there are a few further points worth checking separately.

Personal relocation costs are generally not deductible. Some employer-paid or reimbursed relocation expenses can qualify for fringe benefits tax exemptions, but the type of cost and the conditions matter. A cash allowance is not automatically treated in the same way as a reimbursement. See the ATO’s expense payment guidance.

Your South African tax residency also needs its own assessment. The ordinarily resident test, physical presence test and the tax treaty may all be relevant. Do not assume moving countries settles the question, or that foreign tax credits automatically remove every double-tax issue. SARS explains changes in tax residency; a cross-border tax adviser can help apply the rules to your circumstances.

Finally, some eligible former temporary residents can claim a Departing Australia Superannuation Payment, or DASP, after leaving Australia and meeting the visa conditions. It is not generally available to Australian permanent residents or Australian or New Zealand citizens. Ordinary DASP rates are 35% on the taxed element and 45% on the untaxed element of the taxable component; the tax-free component is untaxed. Working holiday maker rules can instead apply a 65% rate to the taxable component. Check the ATO’s DASP guidance before treating super as money available for a future move.

A payslip becomes more useful when you know what each line represents. You can check what you have been paid, understand what has been withheld and follow the money going into super.

For related questions, read my insurance guide and Medicare experience. If you are still settling in, the Melbourne checklist covers the practical arrival tasks.

If you have questions or need some guidance, feel free to reach out.

The information on this blog is general in nature and does not take into account your personal objectives, financial situation, or needs. Please consider whether the information is appropriate to your circumstances before acting on it.