Why gross-up exists
Lenders assess serviceability on gross income — before tax — because the servicing calculator applies its own tax and living-expense deductions. Hand it a net figure and it deducts tax twice, understating the client's capacity by their whole marginal rate. But clients think in net: "I take home $1,800 a week." Bank statements show net. Some income arrives net by nature. Grossing up is the conversion back to the figure the calculator expects.
Two different things get called gross-up in broking, and confusing them causes real errors:
- Net-to-gross conversion — reversing PAYG withholding to recover the pre-tax salary from a take-home figure. This is what this calculator does.
- Grossing up non-taxable income — some lenders inflate tax-free income (certain pensions, some government payments, child support) to a taxable-equivalent figure, on the reasoning that a dollar of untaxed income is worth more than a dollar of salary. Whether a lender does this, for which income types, and by how much, is entirely lender policy. It is not the same calculation and this page does not perform it.
How net-to-gross is calculated
There is no closed formula, because tax is progressive: the rate depends on the answer. The calculation is iterative — guess a gross, compute the tax on it, subtract, compare with the net you have, adjust, repeat until it converges. Done by hand it takes three or four passes; the calculator does it exactly.
For a resident individual from 1 July 2024 the marginal rates are 0% to $18,200, 16% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above that, plus the 2% Medicare levy on most income. So a client netting $80,000 a year is not on a 30% rate across the board: the first $18,200 was untaxed, the next $26,800 at 16%, and so on. Applying a single flat rate to gross up — dividing by 0.7, say — is the most common error and it overstates gross for anyone under the top bracket.
The figure that matters is annual. A weekly net figure is grossed up by annualising it first (× 52), converting, and dividing back — because the tax tables are annual and a weekly withholding amount already embeds the employer's assumptions about the year. If the payslip covers a period other than a year, use the income annualisation calculator first.
What the conversion cannot know
Net pay is gross minus more than tax. Before you trust a grossed-up figure, check the payslip for anything else that came out — because each of these makes the true gross higher than tax alone implies:
| Deduction on the payslip | Effect on gross-up | What to do |
|---|---|---|
| Salary sacrifice to super | Reduces net without reducing assessable gross | Add it back — most lenders assess pre-sacrifice salary |
| Salary-packaged car or benefits | Net understates gross; may attract FBT | Add back; some lenders treat packaged amounts differently |
| HECS / HELP repayment | Extra withholding at 1–10% of income | Add back to gross, then declare the HELP debt as a liability |
| Union fees, insurance, garnishees | After-tax deductions | Add back to net before converting |
| Medicare levy surcharge / no tax-free threshold | Higher withholding than the tables assume | Adjust — a second job is usually taxed without the threshold |
The clean rule: gross up the client's taxable income only, from a net figure that has had every non-tax deduction added back. If you cannot see the payslip — a bank statement showing only the deposit — you cannot know which of these applies, and the grossed-up figure is a lower bound at best.
A worked example
A client says they take home $5,400 a month. Their payslip shows $250 a month salary-sacrificed to super and a HELP repayment.
- Annual net as stated: $5,400 × 12 = $64,800.
- Add back salary sacrifice: $64,800 + ($250 × 12) = $67,800 net-equivalent.
- Gross up on 2024–25 resident rates with Medicare, ignoring HELP: roughly $86,900. (Dividing by a flat 0.7 would have said $96,860 — nearly $10,000 too high.)
- HELP: at that income the compulsory repayment is about 2.5–3% of gross, so the true gross is a little higher again — around $89,000 — and the HELP debt then goes on the liabilities side, where the lender will deduct the repayment itself.
The client's own "about $90k" would have been right. The point is not that the shortcut is always wrong; it is that you cannot tell whether it is wrong without doing the calculation, and the cases where it matters are exactly the marginal ones.
What this calculator does
It solves net-to-gross iteratively on the current resident tax rates with the Medicare levy, for any pay frequency, and shows the effective average tax rate so you can sanity-check the result against the payslip. It assumes the tax-free threshold is claimed and does not model HELP, offsets, the Medicare levy surcharge, or non-resident rates — each of which shifts the answer and each of which you can see on the payslip. Treat the output as the starting gross, then reconcile it to the payslip before it goes on an application.
General information about how net income is converted for assessment, not tax or lending advice. Tax rates change; confirm against current ATO tables and the lender's policy.