Bonuses and commissions and super¶

Super is worked out on an employee's ordinary time earnings (OTE). So the question for any bonus or commission is simple — is it OTE? If it is, super applies. Most of the time, the answer is yes.

In one line

Commissions and most bonuses are ordinary time earnings, so super applies. A bonus paid only for overtime worked is generally not ordinary time earnings.

Why this matters¶

Bonuses and commissions are easy to get wrong. If you leave super off a payment that should attract it, the employee is short-changed and you may owe the shortfall later. Knowing the rule up front means each payment is handled correctly the first time.

What you will learn¶

Why commissions count as ordinary time earnings
Why most bonuses attract super
The one bonus type that is generally not ordinary time earnings

Understanding the concept¶

Ordinary time earnings are what you pay an employee for their ordinary hours of work. The ATO includes commissions in ordinary time earnings, so super applies to commissions.

The ATO explains that a bonus is a reward for the work an employee has done. Even when a bonus is described as recognising both ordinary service and long hours, it is usually treated as being connected to the employee's ordinary hours. So performance bonuses, Christmas bonuses and similar bonuses are generally ordinary time earnings, and super applies.

There is one exception. A bonus paid solely for work done as overtime is generally not ordinary time earnings. Overtime pay itself is not ordinary time earnings, and a bonus that relates only to overtime follows the same rule — so super generally does not apply to it.

For accountants & bookkeepers

The ATO's view is that a bonus sufficiently connected with ordinary hours is OTE, and it does not accept splitting such a bonus into an "OTE part" and an "overtime part". The narrow carve-out is a bonus referable only to overtime. If you cannot clearly show a bonus relates solely to overtime, treat it as OTE.

Example¶

Mia is a salesperson. During the quarter she earns a commission on her sales and also receives a performance bonus for hitting her targets. Both the commission and the performance bonus are ordinary time earnings, so super is worked out on both.

Separately, Mia's employer pays a one-off bonus purely as a reward for the overtime shifts she took on over a busy weekend. Because that bonus is paid solely for overtime worked, it is generally not ordinary time earnings, so super does not apply to it.

Common mistakes¶

Leaving super off commissions — commissions are ordinary time earnings.
Assuming Christmas or performance bonuses are "extra" and skip super — they are generally ordinary time earnings.
Treating every bonus as overtime-related to avoid super — only a bonus paid solely for overtime is generally excluded, and you need to be able to show that.

How this works in myaccountant¶

In the app — you can mark each pay item, including a bonus or commission, as super-attracting or not. When you add the item to a pay run, myaccountant uses that setting to decide whether super is worked out on it, so a commission or performance bonus can attract super while an overtime-only bonus does not.

Key points¶

Super is worked out on ordinary time earnings.
Commissions are ordinary time earnings, so super applies.
Performance, Christmas and similar bonuses are generally ordinary time earnings.
A bonus paid solely for overtime worked is generally not ordinary time earnings.
You cannot split a normal bonus into an "OTE part" and an "overtime part".
If unsure a bonus relates only to overtime, treat it as ordinary time earnings.

Learn next¶

General information only — not tax, super or financial advice.

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