Superannuation Guarantee – Earnings Base & Ordinary Time Earnings

As of 1 July 2008, employers must include bonuses, commissions and allowances (see table below for exclusions) in a worker’s income for the purpose of calculating the 9% superannuation contribution to make on their behalf, generally it does not include overtime. An employer must use ordinary time earnings as defined in the super guarantee law to calculate super guarantee contributions for employees.

Checklist for Salary or Wages and Ordinary Time Earnings

Payment type Salary or wages Ordinary time earnings
Expense allowance that is paid with the expectation that it will be fully expended in producing income (for example, car allowance paid to real estate agents) No No
Allowances paid (other than a reimbursement of expenses or expense allowance) Yes Yes
Reimbursement of expenses (for example travel costs) No No
Bonuses that don’t relate to specific performance criteria (for example Christmas bonuses) Yes No
Other bonuses Yes Yes
Commission Yes Yes
Over-award payments Yes Yes
Shift loading Yes Yes
Overtime Yes No
Casual loading Yes Yes
Benefits subject to fringe benefits tax (FBT) No No
Workers compensation payments, including top-up payments where no work is performed No No
Workers compensation payments, including top-up payments, paid by the employer, where work is performed Yes Yes
Top-up payments (for example when serving on jury duty or with reserve forces) Yes No
Payments when on maternity or paternity leave Yes No
Pay for annual holiday leave taken Yes Yes
Government wage subsidies (for example Wage Subsidy Scheme allowance) Yes Yes
Annual leave loading Yes No
Pay for sick leave taken Yes Yes
Pay for long service leave taken Yes Yes
Accrued annual leave, long service leave and sick leave paid as a lump sum on termination Yes No
Payments in lieu of notice Yes No
Redundancy payments Yes No
Other payments paid by an employer on termination of employment Yes No
Director’s fees Yes Yes
Payments for performance in, or provision of services relating to entertainment, sport, promotions, films, discs, tapes, TV, or radio Yes Yes
The labour portion of payments to contractors who are employees for super guarantee purposes Yes Yes
Payment type Salary or wages Ordinary time earnings
Dividends No No
Partnership and trust distributions No No
Payments for entering into a restraint of trade agreement No No
Payments for domestic or private work under 30 hours per week No No