Australian Pay & Payroll Glossary
Short answer
This glossary defines the terms on an Australian payslip: PAYG, OTE, the 12% super guarantee, HELP/STSL, casual loading, STP and ETP. Where a term carries a number, the figure is the 2026-27 one, such as the $18,200 tax-free threshold and the 2% Medicare levy.
Every term you will meet on an Australian payslip, in plain English. Year-specific figures are for 2026-27.
Terms A-Z
- PAYG withholding
- Pay As You Go withholding - the income tax your employer deducts from each pay and sends to the ATO on your behalf. It is an estimate collected during the year; your actual tax is settled when you lodge your return.
- Gross pay
- Your earnings before tax and other deductions - base pay plus loadings, allowances, overtime, bonuses and commissions for the pay period.
- Net pay (take-home pay)
- What lands in your bank account after PAYG withholding, the Medicare levy component of withholding, any study loan amounts and other deductions come out of gross pay.
- Tax-free threshold
- The first $18,200 of annual income on which Australian residents pay no income tax. You normally claim it from one employer (usually your main job) on your TFN declaration.
- TFN (Tax File Number)
- Your personal reference number in the Australian tax system, issued free by the ATO. Without one, employers must withhold tax at the top rate (47% for residents).
- ABN (Australian Business Number)
- An 11-digit identifier for businesses and contractors, registered free through the Australian Business Register. Genuine employees are paid through payroll with a TFN - not an ABN.
- Super Guarantee (SG)
- The minimum superannuation an employer must pay - 12% of ordinary time earnings. From 1 July 2026, Payday Super requires it to be paid each payday, reaching your fund within 7 business days.
- Ordinary time earnings (OTE)
- The earnings super is calculated on: ordinary hours pay, most loadings and allowances, commissions and bonuses. Overtime for hours beyond ordinary hours is generally excluded.
- Payday Super
- The rule from 1 July 2026 requiring employers to pay Super Guarantee at the same time as wages instead of quarterly, with contributions reaching the employee's fund within 7 business days of payday.
- Concessional contributions cap
- The yearly limit on before-tax super contributions (employer SG plus salary sacrifice plus deductible personal contributions) - $32,500 for 2026-27. Amounts above the cap are taxed at your marginal rate.
- Salary sacrifice
- An arrangement where part of your pre-tax salary is paid into super (or other benefits) instead of as cash. It lowers taxable income, but sacrificed super still counts for HELP repayment income and the Medicare levy surcharge.
- Medicare levy
- A 2% levy on taxable income that part-funds Medicare, paid by most Australian residents. Low-income earners pay a reduced levy or none; foreign residents and working holiday makers do not pay it.
- Medicare levy surcharge (MLS)
- An extra 1% to 1.5% levy on higher earners who do not hold adequate private hospital cover. For 2026-27 it starts above $105,000 for singles and $210,000 for families.
- HELP debt (HECS)
- A Higher Education Loan Program debt for university study - what most people still call HECS. Repaid through the tax system once repayment income passes the threshold ($69,528 for 2026-27).
- STSL
- Study and Training Support Loans - the umbrella for HELP/HECS, VET Student Loans, Australian Apprenticeship Support Loans and similar. Employers withhold extra PAYG when you tick the STSL box on your TFN declaration.
- Repayment income
- The income base for study-loan repayments: taxable income plus reportable fringe benefits, reportable (salary-sacrificed) super, net investment losses and exempt foreign income.
- LITO (Low Income Tax Offset)
- A tax offset of up to $700 for lower incomes - full amount below $37,500 taxable income, tapering to nil by $66,667. Applied automatically when you lodge; it reduces tax, not the Medicare levy.
- Marginal tax rate
- The rate of tax on your next dollar of income. For 2026-27, resident rates are 0% to $18,200, then 15%, 30%, 37% and 45% above $190,000 - plus the 2% Medicare levy for most.
- Effective tax rate
- Total tax divided by total income - always lower than your marginal rate because earlier slices of income are taxed at lower brackets.
- Casual loading
- The extra percentage (typically 25%) paid to casual employees instead of paid annual and sick leave and other permanent entitlements.
- Penalty rates
- Higher pay rates for working evenings, weekends, public holidays or overtime, set by the relevant award or agreement.
- Modern award
- A legal document setting minimum pay rates and conditions for an industry or occupation. Most Australian employees are covered by one; its rates sit above the national minimum wage.
- National minimum wage
- The wage floor for award-free adult employees, set each year by the Fair Work Commission - $26.44 an hour ($1,004.90 for a 38-hour week) from 1 July 2026.
- National Employment Standards (NES)
- Eleven minimum entitlements for employees in the national system, including 4 weeks annual leave, 10 days paid personal/carer's leave (full-time), parental leave and notice of termination.
- Single Touch Payroll (STP)
- The system where employers report salaries, PAYG and super to the ATO every payday. Your year-to-date figures appear in ATO online services via myGov, replacing annual payment summaries.
- Income statement
- The end-of-year summary of your pay and withheld tax, available in myGov once your employer finalises Single Touch Payroll data - the replacement for the old 'group certificate'.
- Fringe benefits (FBT)
- Non-cash benefits from an employer - like a novated lease car or paid expenses. The employer pays fringe benefits tax; reportable fringe benefits appear on your income statement and count for some income tests.
- Novated lease
- A three-way car finance arrangement where lease payments come out of pre-tax salary. It reduces taxable income but can attract fringe benefits tax and affects income tests.
- Working holiday maker
- A visitor on a 417 or 462 visa. Registered employers withhold 15% on the first $45,000 of income; ordinary foreign-resident rates apply above that, and no Medicare levy applies.
- SAPTO
- The Seniors and Pensioners Tax Offset - reduces or eliminates tax for eligible older Australians, with different thresholds for singles and couples.
- Employment termination payment (ETP)
- A lump sum paid when employment ends - like unused rostered days off or severance beyond the tax-free redundancy amount. ETPs get concessional tax up to a cap ($270,000 for 2026-27).
- Genuine redundancy payment
- A payment made because a job ceases to exist. For 2026-27 the tax-free amount is $13,598 plus $6,801 per completed year of service; amounts above that are taxed as an ETP.
- Long service leave
- Extra paid leave after a long period with one employer - commonly around 2 months after 7 to 10 years, but the rules are set by each state or territory, not the NES.
- Pay period
- The span of time a payslip covers - weekly, fortnightly or monthly. Fair Work requires the payslip to show the period and be issued within one working day of payday.
- TFN declaration
- The form you complete when starting a job, telling your employer your TFN, residency, whether to apply the tax-free threshold and whether you have a study loan - it drives how much PAYG is withheld.