Key takeaway: A $100,000 bonus can lose nearly half its value to tax and Division 293 before it ever reaches your account — and for salaried PAYG employees, the window to do anything about it closes the moment the bonus is paid, not after. The one real lever is arranging salary sacrifice into super before the bonus lands, not afterward.
A version of this frustration comes up constantly among high-income PAYG employees: a bonus gets announced, feels genuinely exciting, and then lands noticeably smaller than expected. Once the tax and superannuation surcharges are accounted for, it’s common for a $100,000 bonus to arrive as barely half that amount — and for the person receiving it to feel like there was nothing they could have done, because unlike a business owner, a salaried employee has no trust, no company structure, and no ability to time or restructure their income.
Why the Bonus Shrinks So Much
Once taxable income passes $190,000, every additional dollar is taxed at 45%, plus the 2% Medicare levy — a combined 47% on the top slice. A $100,000 bonus landing on top of a $200,000 salary sits almost entirely in that top bracket, so close to $47,000 disappears in income tax alone before the money is even received.
On top of that, if the bonus pushes total income (plus concessional super contributions) over $250,000, Division 293 kicks in — an extra 15% tax on concessional super contributions for anyone above that threshold. This bill doesn’t show up in the pay packet at all. It arrives separately, by ATO notice, typically weeks after the regular tax return is assessed — which is exactly why it catches so many people off guard months after they’d already mentally spent the bonus.
The Thresholds Haven’t Moved — and That’s Deliberate
Neither the $190,000 top tax bracket nor the $250,000 Division 293 threshold is indexed to inflation. The Division 293 threshold has been frozen at $250,000 since 2017 — and was actually reduced from $300,000 the year before that, meaning it has genuinely gone backward over time rather than merely stayed flat. As ordinary wages rise with inflation, more people cross these fixed lines every single year, without any change in legislation. It’s often described as bracket creep by design: a way for tax revenue to rise automatically without a government ever having to legislate a tax increase.
What a PAYG Employee Can Actually Do
The honest answer is that the options are genuinely more limited than for someone with a business structure — but they’re not zero. The key is that every real option has to happen before the bonus is paid, not after.
- Salary sacrifice into super, arranged with payroll ahead of time. Amounts sacrificed into super are taxed at 15% (or 30% once Division 293 applies) instead of your marginal rate — a meaningful gap compared to 47%. This has to be set up before the bonus is processed; it can’t be applied retroactively once the payment has already been taxed and paid.
- Using unused concessional cap from previous years. If your total super balance was under $500,000 at the end of the last financial year, unused concessional contribution room from the past five years can be used in a single year. This is exactly the kind of tool built for a lumpy-income year like an unexpected bonus.
- Asking about payment timing. Some employers have flexibility on exactly when a bonus is processed — even shifting it a few days either side of June 30 can occasionally keep it in a more favourable financial year. Many structured bonus schemes don’t allow this, but it costs nothing to ask before assuming it’s fixed.
What genuinely doesn’t exist for PAYG income is any way to unwind tax already withheld at source. Once a bonus has been paid and taxed, that outcome is locked in — the only leverage is in what happens before the payment, not after.
The Actual Lesson
If there’s a genuine takeaway here, it’s that a bonus announcement is the moment to act, not the payment itself. A short conversation with payroll or a tax professional between “I’ve been told I’m getting a bonus” and “the bonus has landed” is the entire window where anything can actually be changed. Once it’s paid, the numbers are final.
This is general information about how PAYG tax and Division 293 work, not personal financial or tax advice. Everyone’s situation is different — speak to a registered tax agent or financial adviser before making decisions about salary sacrifice, super contributions, or bonus timing.
Written by Michael Wignall, who’s spent 30+ years in banking and home lending across the ACT, Illawarra, and Riverina regions of NSW.
