What Your Sales Commission in Australia Actually Pays After Tax

Most salespeople accept commission structures without running the numbers. The employer says "OTE is $160k" and everyone nods. Nobody asks what that actually means after tax. Nobody asks what happens if you hit 80% instead of 100%. Nobody asks what percentage of the team actually hit target last year.

The gap between what you're promised and what lands in your account is where bad career decisions live. We've placed sales talent across building products, lighting, and A&D businesses in Melbourne, Sydney, and Brisbane for years. The candidates who get this right are the ones who do the maths before they sign.

Here's what every sales professional in this market should know before accepting a commission-based offer.

Is commission taxed at a higher rate than salary in Australia?

No. There is no special "bonus tax rate" in Australia. Your commission is taxed at the same marginal rates as your base salary.

The 2025-26 marginal rates for Australian residents run from 0% on the first $18,200 up to 45% on income over $190,000, plus a 2% Medicare levy on top for most people. Commission earnings get added to your total income and taxed at the same brackets as everything else.

The confusion comes from how your employer withholds the tax on lump sum payments, not the actual tax rate.

Why does my commission look like it was taxed at 47% on my payslip?

Because of the way employers calculate PAYG withholding on lump sum payments, not because you've actually paid that much tax.

The ATO's Schedule 5 tells payroll how to handle commissions and bonuses. In practice, this often means your payroll system treats the commission as if you earn that inflated amount every pay period. The withholding gets cranked up for that single payslip.

You haven't actually lost the money. Your real tax bill is calculated on your total taxable income for the year at the standard marginal rates, and any over-withholding comes back when you lodge your tax return.

The part that is real: your commission pushes your total income into higher marginal brackets. A $110,000 base with $40,000 in commission means you're paying tax on $150,000, not $110,000. That extra $40,000 is effectively taxed at 37% plus 2% Medicare, not the lower rates your base salary enjoys.

Do I get super on commission and bonuses?

Almost always, yes. Commission is classified as Ordinary Time Earnings in most sales roles, which means your employer owes Super Guarantee on it.

From 1 July 2025, the Super Guarantee rate is 12%. If you earn $120,000 base and $30,000 in commission, super is calculated on roughly $150,000, not just the base. That's good for your retirement balance, but it's not cash in your pocket today. Factor it in when you're comparing offers.

How much commission does a BDM in building products actually earn?

Most BDMs in building products are on a 60:40 or 70:30 base-to-variable split. On a base of $90,000 to $130,000, realistic OTE sits around $130,000 to $180,000 at full quota.

The key word there is "realistic". Quoted OTE figures assume 100% of target, but in many sales teams only a small percentage of reps actually hit that number. Before accepting any role with a commission component, ask the hiring manager what percentage of the current team hit target last year. If it's under 50%, the OTE is a fantasy number, not a fair estimate of your earnings.

For Account Managers, base salaries sit slightly lower at $80,000 to $110,000 in major capitals, with OTE in the $110,000 to $150,000 range. Spec-focused roles tend to be more base-heavy at 70:30 or 75:25 because the sales cycles are longer and attribution is shared across multiple stakeholders.

What questions should I ask before accepting a commission-based offer?

The five that matter most: what did the territory bill last year, what percentage of the team hit target, is there a cap on commission, what's the ramp protection, and when was the target last revised.

Most candidates ask none of these. They focus on the headline OTE number and miss the structural questions that determine whether they'll actually earn it.

If you're offered a commission-heavy role and the employer can't (or won't) answer these questions, that's information in itself. A confident, well-run sales team has clear answers. A team that struggles to explain its own commission structure is usually one that's seen high turnover or unrealistic targets.

For the full list of questions to ask, including how spec and A&D roles differ from territory sales, read the complete article on understanding sales commission structures.

Run the numbers on your own offer

We built a free calculator that lets you plug in your commission structure and see what you actually take home at any performance level. Base salary, commission type, tax, HELP debt, super. All in one place. It takes a few minutes and gives you a much clearer picture than nodding along to "OTE is $160k" in an interview.

Use the Sales Commission Calculator →

The bottom line

If you're evaluating a sales role in building products, lighting, or A&D, talk to us before you accept. We specialise in this market. We know the talent, we know the comp structures, and we'll give you a straight answer on whether a package stacks up.

Get in touch — james@specifiedselect.com | 0487 640 299

Frequently asked questions

How much commission does a BDM in building products earn in Australia?

Most BDMs in building products are on a 60:40 or 70:30 base-to-variable split. On a base of $90,000 to $130,000, realistic OTE sits around $130,000 to $180,000 at full quota. The key word is "realistic" — always ask what percentage of the current team actually hits target before you trust the OTE figure.

Is commission taxed at a higher rate than salary in Australia?

No. There is no special commission tax rate. Commission is taxed at the same marginal rates as your base salary. The confusion comes from PAYG withholding on lump sum payments, which can make a single payslip look heavily taxed. You get the over-withheld amount back at tax time.

What does OTE mean in a sales job ad?

OTE stands for On-Target Earnings — your base salary plus commission or bonus you'd earn if you hit 100% of target. The problem is most ads don't tell you what percentage of reps actually hit target, what the target is based on, or how long ramp-up takes. Treat OTE as the ceiling, not the floor.

Do I get super on commission and bonuses in Australia?

Almost always, yes. Commission is classified as Ordinary Time Earnings in most sales roles, which means your employer owes Super Guarantee at 12% on it. That's good for your retirement balance but not cash in your pocket today.

What is a fair base-to-commission split for an Account Manager in Sydney?

For an Account Manager in building products in Sydney, you'd typically see a 60:40 or 70:30 base-to-variable split. Base salaries for experienced AMs sit around $80,000 to $110,000, with OTE in the $110,000 to $150,000 range. Spec-focused AM roles tend to be more base-heavy at 70:30 or 75:25.

About the author

This article was written by James Bowesman, specialist recruiter at Specified Select Group. James places BDMs, Account Managers, Specification Managers and Sales Managers into building products, lighting and A&D companies across Melbourne, Sydney and Brisbane. Get in touch with him at james@specifiedselect.com.