How deductions show on a payslip¶

A deduction should never be a mystery to the employee. When you take an amount out of someone's pay, the payslip has to show it — by name and amount — so the employee can see exactly what was taken and where it went.

Showing each deduction clearly is not just good manners. Fair Work requires pay slips to itemise deductions, so the employee can follow the numbers from gross pay down to net pay.

In one line

A payslip must list each deduction by name and amount, so the employee can see the gross pay, the deductions, and the net pay.

Why this matters¶

Employees want to know why their take-home pay is what it is. An itemised payslip answers that question before they even ask. It also helps you: clear records mean fewer disputes, and you are meeting your Fair Work obligation to give a proper payslip.

What you will learn¶

What a payslip must show about deductions
How itemised deductions connect gross pay to net pay
That deductions are also reported to the ATO

Understanding the concept¶

Fair Work explains that a payslip must include any deductions made from the employee's pay, showing the amount of each deduction and the name — or name and number — of the fund or account each deduction was paid into. In other words, each deduction is listed separately, not lumped into one total.

Listed this way, the payslip tells a simple story:

Gross pay — the full amount earned for the period.
Each deduction — listed by name and amount (for example PAYG withholding, or union fees).
Net pay — what is left after the deductions, and the amount actually paid.

Fair Work also expects the employee to get their payslip within one working day of being paid, and the pay records, including deductions, to be kept.

Deductions are not only shown to the employee. Through Single Touch Payroll (STP), you report pay information — including certain deductions such as workplace giving and child support — to the Australian Taxation Office (ATO) when you run the pay.

For accountants & bookkeepers

On the payslip, the fund or account name (and number where relevant) matters — Fair Work ties the deduction line to where the money went. For STP, the ATO treats workplace giving and child support as reportable deduction types, so how a deduction is set up affects how it is reported, not just how it prints. Keeping the payslip line and the STP category consistent avoids mismatches at the employee's tax time.

Example¶

Chen's fortnightly payslip shows a gross pay at the top. Below it, two deductions are listed separately: PAYG withholding with its amount, and union fees with the union's name and the amount. At the bottom is the net pay — the gross less both deductions — which matches what landed in Chen's bank account. Because each line is named, Chen can see at a glance what was taken out and where the union fees went.

Common mistakes¶

Showing one combined "deductions" total instead of listing each one by name.
Leaving off the fund or account name for a deduction that was paid to someone.
Not giving the payslip within one working day of paying the employee.
Assuming the payslip is the only record — pay records must be kept as well.

How this works in myaccountant¶

In the app — each deduction you add as a pay item appears as its own line on the payslip, by name and amount, alongside the gross pay and the net pay. You can email the payslip to the employee after the pay run, and the pay information is reported to the ATO through STP.

Key points¶

A payslip must itemise each deduction by name and amount.
Where a deduction is paid to a fund or account, the name (and number) is shown.
Itemised deductions let the employee follow gross pay down to net pay.
The employee should get their payslip within one working day of being paid.
Some deductions are also reported to the ATO through STP.

Learn next¶

General information only — not tax, super or financial advice.

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