Bonus Tax: Take Cash, Put It Into Super or Pay Down HECS?

Enter your salary and bonus to compare taking the cash, putting it into super and using the cash to reduce your HELP debt. Each result is measured against the same year with no bonus, so the options are directly comparable.

Seeing nearly half a bonus disappear is rough. Usually the final tax is lower than the amount withheld by your employer. The difference is settled when you lodge your return.

The ATO allows two treatments for bonuses. Which one applies depends on the period the bonus relates to. Both are valid, but they can produce very different-looking payslips.

• If the bonus relates to a single pay period — a week, a fortnight or a month — it is simply added to the other earnings for that period and withheld using the ordinary tax table.
• If it relates to more than one pay period, or to no defined period — which covers most annual performance bonuses — the employer must use Method A or Method B. Method A apportions the bonus across the pay periods in the year, works out the extra withholding on one such period, then multiplies it back up, capped at 47% of the additional payment.

The first treatment creates the alarming payslip. PAYG withholding tables treat that unusually large pay run as though it were your normal income all year. A fortnight containing a $10,000 bonus can look like annual earnings of roughly $350,000, so withholding for that pay period reaches close to the top rate.

The reverse can happen if you do not have private hospital cover. Payroll withholding does not include the Medicare Levy Surcharge. Someone on $100,000 without cover who receives a $10,000 bonus can still be under-withheld by about $252, because the $1,090 surcharge is added when the tax return is assessed.

Take the cash if you need the money soon, want to build your savings or can use it against a more expensive debt. You receive less after tax than you could put into super, but the money is available immediately.

Australia has no separate bonus tax rate. A performance bonus, retention payment or commission is ordinary income. It is added to the rest of your income and taxed on the same scale as your salary.

The amount you lose from the bonus can include four things:

• Income tax. The bonus is taxed at the rates that apply to the top of your income. For 2026–27 the rates are nil up to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above that.
• The 2% Medicare levy, which generally applies to the bonus like the rest of your income.
• An extra compulsory HELP repayment, if your repayment income is high enough.
• Offsets you lose. The low income tax offset reduces as taxable income rises between $45,000 and $66,667.

A bonus can cross more than one tax rate. On a $130,000 salary, the first $6,000 of a $20,000 bonus is taxed at 30% and the remaining $14,000 at 37%. The $1,000 standard work-related deduction puts taxable income at $129,000 before the bonus. After the Medicare levy, the effective rate on the whole bonus is 36.9%. Your result can climb further if HELP or the Medicare Levy Surcharge applies.

Super usually gives the bonus its strongest tax treatment. A $10,000 salary sacrificed bonus is generally taxed at 15% inside the fund, leaving $8,500 in super. Someone on $90,000 without HELP would keep about $6,800 by taking the same bonus as cash.

The trade-off is access. Money in super is generally unavailable until you turn 60 and meet a condition of release. Check the timing, your available contribution cap and the effect on HELP before choosing it.

Arrange it before you become entitled to the bonus

The agreement must be in place before you become entitled to the payment. Once the bonus has been declared and you are entitled to it, salary sacrifice is generally no longer available. You may still be able to make a personal deductible contribution after receiving the cash, but that has its own eligibility and notice requirements.

Check how much cap room you have

The concessional contributions cap is $32,500 in 2026–27. Employer Super Guarantee contributions, salary sacrifice and personal deductible contributions all use the same cap. On a $150,000 salary with a $10,000 bonus, employer contributions at 12% can use about $19,200, leaving roughly $13,300 of cap room. Unused cap from the previous five years may be available if your total super balance was under $500,000 at the previous 30 June.

HELP and surcharge thresholds still count the bonus

Salary sacrificed contributions are added back when the ATO works out HELP repayment income and income for the Medicare Levy Surcharge test. Putting the bonus into super cannot move you below either threshold.

• Your HELP repayment is unchanged. Sacrificing a $10,000bonus on a $90,000 salary still creates an extra $1,500compulsory repayment.
• The surcharge liability stays, but the bill can fall. The surcharge rate is applied to taxable income, which salary sacrifice does reduce. On a $100,000 salary with a $10,000 bonus and no hospital cover, the surcharge falls from $1,090 to $990. You still cross the income test.

Paying down HELP can make sense if clearing the debt matters to you or you are close to the end of it. The payment comes from post-tax cash, so it does not change the tax on your bonus.

A voluntary repayment reduces the balance indexed on 1 June and brings forward the date the debt clears. Indexation was 2.8% on 1 June 2026 and is capped at the lower of CPI or the Wage Price Index. HELP debt does not attract interest.

Putting $5,300 of net bonus against a $30,000 balance avoids about $148 of indexation in the first year. The value difference between cash and super in the same example is $1,700. The main benefit of paying HELP is clearing the debt sooner.

To reduce the balance indexed that year, the payment must be processed before 1 June. To use the final-balance exception, it must be credited before you lodge your tax return.

A bonus can move your annual income across a threshold in one step. Check these three before relying on a simple marginal tax rate.

$105,000: Medicare Levy Surcharge

Cross the 2026–27 single threshold without private patient hospital cover and 1% is charged on your whole taxable income. On a $100,000 salary, a $10,000 bonus adds $1,090 of surcharge and takes the effective rate on the bonus from 32% to 42.9%.

The family threshold is $210,000, plus $1,500 for each child after the first. It uses combined family income, so a partner’s salary counts.

$69,528: HELP repayments start

You do not make a compulsory repayment while repayment income stays below this amount. A bonus that lifts someone on $66,000 to $74,000 creates a $521 repayment and raises the effective rate on the bonus to 38.8%. The current system is marginal, so only income above the relevant thresholds attracts the repayment rates.

$250,000: Division 293

Income plus concessional contributions above this point can attract an extra 15% tax on the contributions. Check the super section above before comparing a 15% super tax rate with cash.

The table below is computed on 2026–27 rates. The effective rate column is the share of the bonus consumed by income tax, the Medicare levy, lost offsets and any compulsory HELP repayment — and it exceeds the marginal tax bracket at every income on the table.

Two patterns are worth noticing. The cash column falls as income rises, while the super column stays at 85% of the bonus. The gap widens as income rises, but available cap room shrinks. By $200,000, employer contributions have used almost all of the $32,500 cap.

A HELP debt can move the result further than two tax brackets. Someone on $70,000 with HELP loses 46.2% of the bonus, while someone on $150,000 without HELP loses 39%.