Common questions
Is a bonus taxed at a higher rate?
No. There is no special bonus tax rate in Australia. A bonus is taxed at your marginal rate because it adds to your total income — so it feels heavily taxed if you are in a higher bracket, but the rate is the same as your top slice of salary.
Why did my employer withhold so much from my bonus?
Employers use PAYG lump-sum withholding rules that can take more than your actual marginal rate. If too much is withheld, you get the difference back as a refund when you lodge your return.
Does a bonus affect my HECS repayment?
Yes. A bonus is included in your repayment income, so it can lift your compulsory HECS repayment for the year, or push you over a repayment threshold.
Can I reduce the tax on my bonus?
You can ask your employer to salary sacrifice some of it into super, where it is taxed at 15% instead of your marginal rate (within the concessional cap). See our salary sacrifice tool to model it.