High Income Earner? These Super Strategies Could Legally Cut Your Tax Bill This Year

Last updated: 25 July 2026

A bigger salary is welcome. The tax bill attached to it can be less cheerful.

For Australian residents, taxable income above $190,000 sits in the 45% tax bracket. The Medicare levy is usually another 2%. That means an extra dollar of taxable income can lose 47 cents to tax before other items, including the Medicare levy surcharge, are considered.

So, can a high-income earner legally pay less tax? Often, yes. The sensible options are usually quite ordinary: use the super rules properly, claim expenses you can prove, plan capital gains before 30 June and avoid copying American tax tactics into an Australian return.

According to my research, that last point causes more confusion than people expect. A 401(k), IRA, HSA and 1031 exchange are U.S. concepts. They do not apply to an Australian individual tax return. Australia has its own superannuation caps, deduction rules and capital gains tax system.

Start with concessional super contributions

For many employees on higher incomes, concessional super contributions are the first number worth checking. These are contributions made before tax, or personal contributions for which you claim a tax deduction.

The general concessional contributions cap for 2026-27 is $32,500. That cap includes:

• compulsory employer Super Guarantee contributions;
• salary sacrifice contributions;
• other employer contributions; and
• personal super contributions claimed as a tax deduction.

The cap is not an extra $32,500 on top of what your employer pays. Employer contributions use part of it. This catches people who set a salary sacrifice amount at the start of the year and never check what has already reached the fund.

From my experience reviewing tax articles, this is one of the most repeated mistakes. The annual cap gets quoted correctly, but the employer contribution is left out of the calculation.

Concessional contributions are generally taxed at 15% in the fund. For someone paying a 45% marginal income tax rate plus the usual 2% Medicare levy, the tax difference can be worthwhile. The money is then preserved in super until you meet a condition of release, so the tax result cannot be separated from your cash-flow needs.

A simple 2026-27 example

Assume an employee earns $200,000 in ordinary time earnings, has no other income or losses, and receives employer super at 12%. The example ignores fees, insurance, investment returns and personal circumstances.

Our data shows an estimated $2,720 tax difference in this stripped-back example. It is an illustration, not a quote or promise. Reportable fringe benefits, investment losses, a bonus, extra employer contributions or Division 293 tax could change the result.

Contribution timing also matters. A contribution counts in the financial year when the super fund receives it. A payroll deduction made in late June may reach the fund in July. Check early rather than relying on the final pay run.

Do not overlook Division 293 tax

High-income earners may pay Division 293 tax. It applies when your income for Division 293 purposes plus concessional contributions exceeds $250,000.

The extra tax is 15% on the relevant amount of concessional contributions. In broad terms, that can lift the contributions tax from 15% to 30% for the affected portion. A person on the top personal rate may still have a tax advantage, but it is smaller.

The definition of income used for Division 293 is broader than salary. It can include items that do not appear in the number on your employment contract, including reportable fringe benefits and certain net investment losses. This is a good place to stop using rough mental arithmetic and get a proper estimate.

Check unused concessional caps from earlier years

You may be able to use unused concessional cap amounts from the previous five financial years. To qualify, your total superannuation balance generally needs to have been below $500,000 at the end of the previous 30 June.

This can help after a large bonus, a return to full-time work or a year with a capital gain. It can also suit someone who spent several years making only modest employer contributions and now has spare cash available.

Your available amount can be checked through ATO online services linked to myGov. Use that figure as a starting point, then compare it with contributions that have reached your fund but may not yet appear in the ATO record. The oldest unused amounts expire after five years.

Do not assume a large catch-up payment is automatically sensible. Check the tax result, the contribution timing and how much cash you will still need outside super.

Claim a deduction for an eligible personal super contribution

Salary sacrifice is not the only way to make a concessional contribution. You can contribute personal money to super and, if eligible, claim a tax deduction for some or all of it.

You need to give your fund a valid notice of intent to claim the deduction. The fund must acknowledge that notice before you claim the deduction in your tax return. The contribution then counts toward your concessional cap.

This method can suit people whose income changes during the year. A consultant might receive a larger-than-expected contract payment. An employee may get a bonus after the employer’s salary sacrifice cut-off. A deductible personal contribution can allow the final amount to be decided closer to 30 June.

Be careful if you plan to roll money to another fund, start a pension or withdraw benefits. Those actions can affect the notice process. Send the contribution and paperwork early enough to fix a problem.

Know what after-tax super contributions can and cannot do

The general non-concessional contributions cap for 2026-27 is $130,000, subject to your total super balance and other eligibility rules. Some people may be able to use the bring-forward rules and contribute more than one annual cap in a single year.

These contributions come from after-tax money. They do not create an income tax deduction merely because the money goes into super.

They may still improve long-term tax efficiency because investment earnings in an accumulation account are generally taxed at up to 15%, rather than at your personal marginal rate. That comes with a trade-off. The money becomes subject to super access rules, contribution limits and future policy changes.

Consider a spouse super contribution

A high-income earner with a lower-income spouse may qualify for the spouse super contribution tax offset. The maximum offset is $540 when the conditions are met.

The full offset is generally available when you contribute at least $3,000 and your spouse’s relevant income is $37,000 or less. It reduces as the spouse’s income rises and cuts out at $40,000.

This is a small tax offset compared with the amounts discussed elsewhere in this article. Still, it can put more retirement savings into the lower-balance spouse’s account. Check the spouse’s age, income, total super balance and contribution eligibility first.

Claim real deductions, not hopeful ones

Tax deductions reduce taxable income. They do not refund the full cost of an expense.

If you spend $1,000 on a deductible item and your effective marginal rate is 47%, the tax reduction may be about $470. You are still $530 out of pocket. Buying something unwanted for a deduction is poor maths.

The ATO’s basic rules for work-related claims are plain:

• you paid the expense yourself and were not reimbursed;
• the expense directly relates to earning your income; and
• you have records to support the claim.

Possible claims vary by job. They may include professional memberships, income-related self-education, work travel, protective clothing, home office costs and the work-use portion of phone or internet bills. Private use must be removed.

Other deductions may include eligible income protection premiums, investment expenses and the cost of managing your tax affairs. The wording matters. A financial advice invoice may contain a deductible tax-advice component and a non-deductible personal financial planning component.

Keep receipts, invoices, diary records and calculations as you go. A bank transaction proves that money moved. It does not always prove what was purchased, how it related to income or how the private portion was removed.

Time charitable gifts to match a high-income year

A genuine gift to a deductible gift recipient can be claimed as a deduction when the ATO conditions are met. Check the organisation’s DGR status. Charity registration by itself does not always mean donations are tax deductible.

The payment must be a real gift. If you receive a material benefit, the normal gift deduction rules may not apply. Buying raffle tickets, auction items or a fundraising dinner seat is different from making a cash donation with nothing substantial in return.

People who already plan to donate may choose to make the payment before 30 June in a year when taxable income is unusually high. That could be the year of a bonus, business sale or large capital gain. Keep the receipt and bank record.

For larger gifts, ask a tax adviser about the rules for donating shares, property or using an ancillary fund. Valuation requirements and CGT consequences can arise. The paperwork should be settled before the asset moves.

Use capital losses carefully

Capital losses can reduce capital gains. They cannot normally be used to reduce salary, wages or interest income.

Suppose you sold shares at a $30,000 capital gain and hold another investment with a genuine $12,000 unrealised loss. Selling the second investment before 30 June may create a capital loss that can be applied against the gain. The investment decision still needs to make sense without the tax result.

Australian resident individuals may qualify for a 50% CGT discount on an eligible asset held for at least 12 months. Capital losses are applied before the discount is calculated.

Do not sell an asset only to manufacture a loss and promptly buy back the same or a near-identical asset under a prearranged plan. The ATO has warned about wash sales used to create artificial tax losses.

Review the Medicare levy surcharge

The Medicare levy surcharge is separate from the standard Medicare levy. It can apply when your income for surcharge purposes is above the relevant threshold and you, your spouse or dependants do not have appropriate private patient hospital cover.

For 2026-27, the surcharge rates run from 1% to 1.5%, depending on income tier. The thresholds differ for singles and families.

Compare the annual cost and terms of suitable hospital cover with the possible surcharge. Do not choose a policy solely because the premium is lower than the tax. Waiting periods, exclusions, excesses and the needs of everyone on the policy still count.

Business owners need a separate tax plan

A business owner has more moving parts than an employee. Legitimate business expenses may be deductible when they directly relate to earning assessable income. Super contributions for working owners or employees may also form part of the plan.

That does not make every payment through a company deductible. Private expenses remain private. Moving personal income to a spouse, trust or company without a commercial and legal basis can bring tax, payroll and anti-avoidance problems.

Review salary, dividends, trust distributions, super contributions and business purchases together. A decision that cuts one tax bill can create another obligation elsewhere. Get the advice before signing contracts or recording distributions, not after year-end.

Super or ETF: they are not direct alternatives

This question comes up often: should I put more into super or buy an exchange-traded fund in my own name?

Super is a tax and retirement structure. An ETF is an investment product. Some super funds invest in index portfolios, and an SMSF may hold ETFs directly. The real comparison is usually an investment held inside super versus a similar investment held personally.

Inside an accumulation account, investment earnings are generally taxed at up to 15%. Outside super, income is usually taxed at your personal rate, with franking credits and the individual CGT discount affecting the final result.

Personal ownership gives you access to the money at any time. Super restricts access until a condition of release is met. Fees, insurance, investment choice, estate planning and contribution caps can change the answer. Compare the same underlying investment over the same period after tax and fees.

A practical checklist before 30 June

1. Estimate your taxable income, including bonuses, distributions, rent and investment income.
2. Check employer super already received by your fund.
3. Review unused concessional caps in ATO online services.
4. Allow time for any contribution to clear into the fund before 30 June.
5. Complete the notice process for a deductible personal contribution.
6. List realised capital gains, losses and assets you genuinely planned to sell.
7. Confirm donations went to a DGR and keep the records.
8. Check work and investment deductions against invoices, diaries and private-use calculations.
9. Review your private hospital cover and possible Medicare levy surcharge.
10. Ask a registered tax agent to model large or unusual transactions before they happen.

Common questions

What counts as a high income in Australia?

There is no single definition for every tax rule. The top resident income tax bracket starts above $190,000. Division 293 uses a $250,000 threshold based on its own income calculation. Medicare levy surcharge thresholds use another measure and vary by family status.

Is salary sacrifice always worth doing?

No. It may reduce tax, but the contribution cap, Division 293, cash flow and restricted access to super all need to be checked. People saving for a home, paying expensive debt or facing near-term costs may need more money outside super.

Can a capital loss reduce tax on my salary?

Normally, no. A capital loss is used against capital gains. Unused net capital losses can generally be carried forward for use against future capital gains.

Can I make a personal super contribution after 30 June and claim it for the previous year?

No. The fund must receive the contribution in the financial year for which it is counted. A contribution received in July belongs to the new financial year, even if you sent it in June.

Does a non-concessional contribution cut my taxable income?

No. It is made from after-tax money and does not normally create a personal deduction. Its possible tax benefit comes later through the way earnings are taxed inside super.

Make the decision before the deadline

The better tax moves usually need action before 30 June. A tax return records what already happened. It cannot send a late contribution back into the previous year, turn a private purchase into a work expense or create a capital loss on an asset you still own.

Start with the facts: expected income, super contributions received, unused caps, capital gains and deductible expenses backed by records. Then model the tax result and the effect on your cash.

Paying less tax can be a sensible outcome. Locking away too much money, exceeding a cap or selling a sound investment for a short-term deduction can cost more than it saves.