Tax on Bonuses in Australia: Why Your Payslip Looks Brutal

Is a bonus taxed more in Australia?🔗

No, full stop. There is no special bonus tax rate. A work bonus is ordinary assessable income, the same as your salary. It is added to your total income for the year and taxed at your normal marginal rates.

If your salary sits in the 30 percent bracket, your bonus is taxed at 30 percent on the part that stays in that bracket, and 37 percent only on any part that spills into the next one. No bonus surcharge, no penalty rate.

Why your bonus payslip looks like half went to tax🔗

If the rate is normal, why does the payslip look so ugly? The ATO's Schedule 5 withholding method for lump-sum payments. Your employer takes the bonus, effectively annualises it across your pay periods, works out the tax on that higher figure, and withholds the difference. Because it treats you (briefly) as if you earn the bonus every pay period, the withholding rate can land above your actual average rate for the year.

Will you get some of it back?🔗

Often, yes. Here is a worked example using current (2024-25) rates. Base salary $85,000, bonus $10,000, total $95,000, no HELP debt, private hospital cover held.

Because the whole bonus stays inside the 30 percent bracket here, the withholding and the actual tax line up closely. Where you tend to get a bigger refund is when the Schedule 5 method over-estimates, or when only part of the bonus tips into a higher bracket. Figures are illustrative and use 2024-25 rates, so confirm the current ones with the ATO. Model your own numbers with our salary and tax calculator.

Does super get paid on a bonus?🔗

For most performance bonuses, yes. The super guarantee (12 percent from 1 July 2025) applies to payments that form part of your ordinary time earnings (OTE), and the ATO treats most performance bonuses as OTE. So a $10,000 performance bonus usually comes with about $1,200 of super on top.

The narrow exception: a genuine bonus paid specifically for work performed entirely outside ordinary hours may sit outside OTE and not attract super. Check your payslip to confirm super was paid, and ask your employer if you are unsure.

Bracket creep, HECS and the Medicare levy🔗

A bonus adds to your total income, so it can push a slice of your earnings into a higher bracket (only the slice above the threshold is affected). If you have a HELP or HECS debt, the bonus counts toward your compulsory repayment income and can lift your repayment when you lodge. And if it pushes you over 97,000 dollars (singles, 2024-25) without private hospital cover, the Medicare levy surcharge can apply. These thresholds change each year, so check the current ones with the ATO.

Sacrificing your bonus into super🔗

If you are on a higher marginal rate and do not urgently need the cash, salary sacrificing a bonus into super can be genuinely tax-effective. Instead of receiving it as cash (taxed at your marginal rate), you redirect it into super as a concessional contribution, taxed at 15 percent.

The rules that matter:

• Timing. The arrangement must be in place BEFORE you become entitled to the bonus. Once it is declared or paid, it is too late.
• The cap. Stay within the concessional contributions cap (30,000 dollars for 2024-25, including your employer's regular contributions). Going over means the excess is taxed at your marginal rate anyway.
• Liquidity. The money is locked in super until preservation age, so only sacrifice what you will not need before then.

❓ Frequently asked questions🔗