If you’re a high income earner, congratulations – you’re doing something right. Unfortunately, the tax system has noticed. This guide is written for people in Australia who want to keep more of what they earn legally, without waking up to an ATO letter that ruins their week.  

The big idea is simple: at higher marginal rates, a “small” mistake is rarely small. The fix is usually not a gimmick – it’s good planning, good records, and knowing which rules apply to your situation. 

What “High Income” Means (And Why it Changes Your Strategy)

High income earners in Australia sit in a part of the tax system where the “last dollar” of income is taxed heavily, and small mistakes can get expensive fast. For 2025–26 resident rates, taxable income over $190,000 is taxed at 45% (on that top slice), with the Medicare levy layered on top, and potentially the Medicare levy surcharge if you don’t hold appropriate private hospital cover. 

The planning opportunities most relevant are usually “boring-but-powerful”: optimising super contributions within the caps (and understanding Division 293), planning capital gains tax (CGT) timing and documentation, getting property deductions right (particularly interest, repairs vs improvements), and making sure trust/company structures don’t accidentally trip integrity rules like Division 7A and section 100A. 

Over the last three years, several changes/proposals matter for high income earners: the revised Stage 3 “cost-of-living tax cuts” have applied since 1 July 2024; further personal tax rate cuts were announced for 1 July 2026 and 1 July 2027 (reducing the 16% bracket rate); and Division 296 has been legislated to reduce superannuation tax concessions for total super balances above $3 million from 1 July 2026 (with an additional tier above $10 million). 

The practical reality: if you earn well, you’re more visible to the ATO, and the ATO has published specific focus areas and tax performance programs for privately owned and wealthy groups. That doesn’t mean you’ll be audited tomorrow, but it does mean “tidy records + conservative positions + documented rationale” is the grown-up strategy. 

Medicare Levy and Medicare Levy Surcharge (MLS):

Most taxpayers pay the Medicare levy at 2% of taxable income. 

If you (and your family, if relevant) don’t have appropriate private hospital cover, you may also pay the Medicare levy surcharge. For 2025–26, the ATO sets MLS tiers and thresholds, and the surcharge rate ranges from 1% to 1.5% depending on your income tier. 

Two practical takeaways:
First, check your cover is the right type of cover (hospital cover is the usual trigger area). Second, check your income for MLS purposes, because MLS can apply based on your income and certain reportable items, not just your salary. 

Superannuation: Still The Workhorse Strategy

Concessional contributions are often the first place high income earners look because (done correctly) they can reduce taxable income and build retirement wealth in a concessionally taxed environment.

From 1 July 2024, the concessional contributions cap is $30,000. These contributions generally include employer contributions and salary sacrifice. 

Where people get caught is Division 293. The ATO explains that if your income plus concessional contributions total more than $250,000, you may have to pay Division 293 tax. The additional Division 293 tax rate is 15%. 

This is still often worthwhile, but the maths changes: for affected taxpayers, part of your concessional contributions can effectively be taxed at 30% (15% contributions tax + 15% Division 293 tax). That’s usually still lower than a top marginal personal rate, but you need to model it properly and avoid busting the caps. 

If you’re eligible, carry-forward concessional contributions can turbocharge this strategy. The ATO notes you can carry forward unused concessional cap amounts from up to five previous financial years, and eligibility depends on having a total super balance below $500,000 at the relevant prior 30 June checkpoint. 

On the after-tax side, the ATO’s published contribution cap data shows a non-concessional cap of $120,000 for 2025–26 (with bring-forward rules and total super balance thresholds affecting what you can do). 

CGT and Investing

High earners often have investments (shares, managed funds, businesses, property), and the timing of a sale can matter as much as the sale itself.

The ATO’s CGT guidance notes that there is generally a 50% CGT discount for Australian resident individuals who own an asset for 12 months or more. 

This can make a big difference, but only if you hold the asset long enough and keep the cost base records clean. If you change residency, the CGT position can change (including impacts to discount availability) so globally mobile high earners should be especially careful. 

Negative Gearing and Property: “Deductible” Doesn’t Mean “Anything You Can Think Of”

Treasury explains negative gearing as a situation where expenses associated with an asset exceed the income earned from the asset, and the resulting loss can be deducted against other income (such as salary and wages). 

Property is where many taxpayers get sloppy, and the ATO has (publicly) warned rental property owners about common pitfalls, especially confusing repairs with improvements (which are often capital in nature and not immediately deductible), and claiming things that must be claimed over time. 

If your loan has redraws or a mixed purpose, interest deductibility can become an apportionment puzzle. If your property is not genuinely available for rent for part of the year, your deduction position can change. These are boring details, but they are exactly the kind of details that decide whether your position is defensible. 

Trusts and Companies: Powerful Tools, But the ATO Cares how You Use Them

Trusts: At a basic level, trust beneficiaries generally include their entitlement to trust income in their own tax returns, and pay tax at their own rates. 

But “trust planning” has sharp edges. The ATO explains section 100A as an anti-avoidance rule that can apply where a beneficiary’s trust entitlement arose from a reimbursement agreement. The ATO’s TR 2022/4 and PCG 2022/2 guidance are core references in this area. 

Companies: Companies generally pay 25% or 30% depending on whether they qualify as base rate entities (turnover and passive income tests matter). 

Where people get burned is taking money out of a company informally. The ATO’s private company benefits guidance highlights that a deemed dividend may arise when a private company provides a payment or other benefit to a shareholder or their associate. Meanwhile, the ATO publishes the Division 7A benchmark interest rate (8.37% for 2025–26), which matters if you use complying loan arrangements. 

If you’re running (or investing through) trusts and companies, treat structure like a compliance project, not a vibe.

PAYG Instalments: Avoid the “Surprise Tax Bill” Lifestyle

If you earn business or investment income, you may be brought into PAYG instalments. business.gov.au explains that once your business and investment income reaches a threshold, you’ll pay income tax in instalments (usually quarterly), which can help avoid a large bill when you lodge your return. 

High earners with significant investment income often benefit from building a PAYG plan early in the year, because scrambling in May or June is not a strategy. It’s just cardio.

Need Advice From an Expert?

If you want tax advice that’s actually tailored to your income mix, assets, and structures, speak with HPartners. We can help you build a defensible plan around super, CGT, property deductions, and trust/company compliance, so you keep more of what you earn without stepping on the ATO’s landmines.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.