[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” locked=”off” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Intro” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Gross pay is the total amount of money an employee earns during a pay period before any deductions are applied. It includes their base salary, overtime pay, bonuses and other monetary benefits.<\/p>\n
So, why should you learn about gross pay? For workers, it helps you get a better understanding of your income tax obligations with the IRD, while for employers it\u2019s used when calculating net pay and managing your financial planning for the business.<\/p>\n
[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2025\/01\/Gross-Pay-vs-Net-Pay-2.png” title_text=”Gross Pay Vs Net Pay 2″ align=”center” _builder_version=”4.27.2″ _module_preset=”default” custom_margin=”|-30px|||false|false” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
In short, gross pay is the total earnings before any deductions. On the other hand, net pay \u2013 what most people would call their \u2018take-home pay\u2019 \u2013 is the amount deposited into the employee’s bank account. The deductions made to the gross pay include things like:<\/p>\n
Here\u2019s an example to help illustrate how it works: if an employee has a gross annual income of $75,000 and pays $15,000 in taxes, superannuation and other deductions, their net salary will be $60,000.<\/p>\n
Its main usefulness is how it helps clarify for employees how much they are liable to pay in income tax and other deductions. It can also be used as a benchmark when negotiating a pay bump with employers, or applying for loans or rental agreements. In essence, gross pay helps employees get a broader assessment of their overall earning capacity and plans for savings or investments.<\/p>\n
For employers, gross pay is essential for things like managing payroll and calculating tax withholdings, as well as staying compliant with IRD laws in general. It can also inform your business budgeting plans by helping you estimate staff costs and any plans for future growth<\/p>\n
<\/p>\n
[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2025\/01\/Gross-Pay-Components.png” title_text=”Gross Pay Components” admin_label=”Image” _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Gross pay encompasses more than just the base salary. Let\u2019s break it down into its five core parts:<\/p>\n
For employees on a salary, calculating gross pay starts with how often they are paid. This could be weekly, fortnightly or monthly.<\/p>\n
Example:<\/em><\/span> An employee with paid $7,500 every month (before deductions) will look like:<\/p>\n $7,500 (gross monthly pay) x 12 = $90,000.<\/em><\/strong><\/p>\n If the employee also receives a $5,000 performance bonus, their total gross annual pay will be $95,000. You could then have that annual salary divided by 12 to get their final gross pay per month ($7,916.67).<\/p>\n For hourly workers, an employee\u2019s gross pay is calculated by multiplying the hourly wage by the total hours worked during the pay period, including overtime.<\/p>\n Example:<\/em><\/span> An employee earning $30 per hour works 40 regular hours and 10 overtime hours (paid at 1.5x):<\/p>\n Regular pay = $30 \u00d7 40 = $1,200<\/em><\/strong> [\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2025\/01\/Gross-Pay-obligations.png” title_text=”Gross Pay Obligations” admin_label=”Image” _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n Understanding gross and net income forms the basis for determining an employee\u2019s taxable income, which affects:<\/p>\n In New Zealand, gross income is the total income from all sources before deductions, which can include:<\/p>\n A person earning $80,000 in gross pay and $20,000 in investment income, for example, will have an individual gross income of $100,000 for the year.<\/p>\n Employers must accurately calculate gross pay to make sure they are in compliance with New Zealand employment laws and tax requirements. They also need to do so for managing payroll and to meet reporting obligations for the IRD. Then there\u2019s the need to use gross profit numbers to budget effectively for staff costs and other business expenses.<\/p>\n Gross pay can have an effect on a number of different parts of an employee\u2019s financial life, including their:<\/p>\n Gross income is the total earnings before deductions, while net income is the amount the employee takes home after taxes, super and other deductions.<\/p>\n Gross pay usually shows up at the top of the pay slip as the total amount earned for the period.<\/p>\n Overtime pay is calculated at a higher rate and added to the gross pay for the period.<\/p>\n Wrapping your head around gross pay will give you clarity around your earnings, while at the same time helping both employees and employers meet their tax obligations.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”Related terms” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” locked=”off” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n See related terms<\/strong> <\/p>\n [\/et_pb_text][ba_social_share icon_bg=”#03002e” icon_padding=”10px|12px|10px|12px|true|true” layout=”classic” show_text=”off” btn_padding=”0px|0px|0px|0px|false|false” btn_bg_color=”RGBA(255,255,255,0)” _builder_version=”4.23″ _module_preset=”default” custom_margin=”50px||||false|false” custom_padding=”25px||||false|false” custom_css_before=” content: %22SHARE THIS%22;|| font-size: 16px;|| font-weight: 700;|| line-height: 22px;|| letter-spacing: 0em;|| text-align: center;|| color: #ff5447;|| margin-bottom: 10px;|| display: inline-flex;|| position: absolute;|| margin-top: 10px;” border_width_top_main=”1px” border_color_top_main=”#e4e4e4″ border_radii_icon=”on|5px|5px|5px|5px” global_colors_info=”{}” custom_css_before_last_edited=”off|desktop”][ba_social_share_child _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”facebook” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”linkedin” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”email” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][\/ba_social_share][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Gross pay is the total amount of money an employee earns during a pay period before any deductions are applied. It includes their base salary, overtime pay, bonuses and other monetary benefits. So, why should you learn about gross pay? For workers, it helps you get a better understanding of your income tax obligations with […]<\/p>\n","protected":false},"author":28,"featured_media":0,"menu_order":0,"template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"class_list":["post-289880","glo","type-glo","status-publish","hentry"],"yoast_head":"\nHourly employees<\/h3>\n
Overtime pay = $45 \u00d7 10 = $450<\/em><\/strong>
Gross weekly pay = $1,650<\/em><\/strong><\/p>\nGross pay and your IRD tax obligations<\/h2>\n
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Gross pay vs gross income<\/h2>\n
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Why employers need to understand gross pay<\/h2>\n
How gross pay impacts employees<\/h2>\n
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What\u2019s the difference between gross pay and net pay?<\/h3>\n
How is gross pay displayed on a pay slip?<\/h3>\n
What if an employee works overtime?<\/h3>\n
What is personal services income?<\/a>
What is net income?<\/a>
What is net profit?<\/a><\/p>\n