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Calculation of Superannuation Guarantee Contributions – Ordinary Time Earnings

 

From 1 July 2008 there will be an important change to superannuation guarantee contributions.

Super guarantee contributions are currently calculated in accordance with the earnings base defined in one of the following instruments:

  • an industrial award
  • an existing employment agreement
  • a fund’s trust deed
  • a law of the Commonwealth or State

Most instruments use ‘Ordinary Time Earnings’ (OTE).  Where the instrument is silent, OTE is used to calculate the minimum 9%.  However, some awards or agreements use a method other than OTE.

From 1 July 2008 all employers will have to use OTE to determine superannuation contributions.

For most employees, their employer superannuation contributions are calculated using OTE so these changes will have little, or no, effect.

Some industries use an award which excludes commission earnings from OTE.  This is common in the real estate and motor vehicle sales industries.  Now, from 1 July 2008, as per OTE, commission earnings will attract the 9%.

Please find below a table outlining some common payments and whether they attract the 9% superannuation contribution under OTE. 

Members are encouraged to contact TCCI if they have any questions.   

The ATO website has further information (www.ato.gov.au).

  

 

Payment Type

OTE

Allowances paid (other than a reimbursement of expenses or expense allowance)

Yes

Reimbursement of expenses (for example travel costs)

No

Bonuses that don’t relate to specific performance criteria (for example Christmas bonuses)

No

Other bonuses

Yes

Commission

Yes

Over-award payments

Yes

Shift loading

Yes

Overtime

No

Casual loading

Yes

Workers compensation payments, including top-up payments where no work is performed

No

Workers compensation payments, including top-up payments, paid by the employer, where work is performed

Yes

Top-up payments (for example when serving on jury duty or with reserve forces)

No

Payments when on maternity or paternity leave

No

Pay for annual holiday leave taken

Yes

Annual leave loading

No

Pay for sick leave taken

Yes

Pay for long service leave taken

Yes

Accrued annual leave, long service leave and sick leave paid as a lump sum on termination

No

Payments in lieu of notice

No

Redundancy payments

No

Other payments paid by an employer on termination of employment

No

 

 

 

 

 

 

 

 

 

 

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