Insight Accounting Pty Ltd is a CPA Practice

Beaconsfield (03) 9707 0555

Cranbourne (03) 5995 2700

Pakenham (03) 5940 4555

Warragul (03) 5622 1793

OTE and Super Guarantee–December 2013

What are “ordinary time earnings” for calculating the super guarantee?

The Tax Office stipulates that a business must use “ordinary time earnings” to calculate the minimum compulsory superannuation guarantee contributions for employees. It says that using ordinary time earnings will ensure all eligible workers are treated the same, and will have a fair amount of super guarantee put away.

But what exactly is “ordinary time earnings”? The Tax Office says this is generally what your employees earn for their normal hours of work, and includes:

  • over-award payments
  • bonuses
  • commissions
  • allowances.

An employee’s “ordinary hours of work” are the hours specified as his or her employment agreement or under their relevant award (or under a combination of such documents), which governs the employee’s conditions of employment.

If the ordinary hours of work are not specified, the ordinary hours of work can be taken to be the normal, regular, usual or customary hours worked by the employee, “as determined by all the circumstances of the case”, the Tax Office says. This is not necessarily the minimum or maximum number of hours worked or required to be worked.

Payments for work performed in a time outside an employee’s ordinary hours (such as overtime payments) are not ordinary time earnings. This is so whether the payments are calculated at an hourly rate, or the employee gets a specific loading, or an annualised or lump sum component of a total salary package, that is expressly referred to as overtime hours, or as remuneration for overtime hours worked.

But the Tax Office says that where overtime amounts cannot be distinctly identified, the hours actually worked should be included in ordinary hours of work. The Tax Office has provided a checklist to help employers determine what is included in ordinary time earnings (OTE).

Checklist for salary or wages and ordinary time earnings

123
DISCLAIMER:All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Taxpayers Australia Incorporated, each of its directors, councilors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by Taxpayers Australia Inc (ABN 96 075 950 284).


Insight Accounting Pty Ltd is a CPA Practice

Liability Limited by a scheme approved under Professional Standards Legislation

© Copyright 2014 - Insight Accounting | Accountant Cranbourne, Beaconsfield, Pakenham, Berwick, Narre Warren, Officer, Warragul, Drouin, Tax Returns South East Melbourne | Disclaimer | Privacy Policy | Contact