What earnings attract super¶

Not every dollar you pay an employee attracts super. Employer super is worked out on ordinary time earnings (OTE) — broadly, what an employee earns for their ordinary hours of work. So the question "does this attract super?" is really "is this part of OTE?"

This lesson gives you a plain-English "what's in, what's out" overview based on the ATO's OTE guidance. For the trickier pay items, we point you to a dedicated lesson.

Why this matters¶

Getting this right, pay item by pay item, is what keeps super correct. Include something you should not and you overpay; leave something out and you can end up with a super shortfall to fix. A quick "in or out" mental checklist saves rework.

What you will learn¶

• Which common earnings are broadly IN for super
• Which common earnings are broadly OUT for super
• Where to check the tricky pay items in more detail

Understanding the concept¶

Here is the broad picture from the ATO's OTE guidance. Treat it as a starting point — some items depend on the details, which is why the tricky ones have their own lessons.

Broadly IN (part of OTE — super applies):

• Pay for ordinary hours of work
• Over-award payments (paying above the award rate for ordinary hours)
• Many allowances (but not expense allowances — see below)
• Commissions
• Paid leave taken while still employed, such as annual leave and sick leave
• Some bonuses

Broadly OUT (not OTE — no super):

• Overtime payments (where ordinary hours are clearly identified)
• Reimbursements of expenses an employee has actually spent
• Expense allowances meant to cover costs the employee will incur
• Unused annual leave and similar leave paid out on termination

The tricky ones — allowances, bonuses and commissions, leave payments, overtime and termination payments — each have their own lesson, because whether they attract super depends on the specific type of payment.

Example¶

Priya's cafe pays her employee Dan for his ordinary rostered hours, a small commission on catering, and a uniform reimbursement when he buys an apron. The ordinary hours pay and the commission are OTE, so super applies to them. The reimbursement is not OTE, so no super is worked out on it. When Dan works a late overtime shift, that overtime is generally not OTE either, so no super applies to the overtime portion.

Common mistakes¶

• Treating an expense reimbursement as normal pay and adding super to it.
• Assuming every allowance attracts super — expense allowances generally do not.
• Adding super to unused leave paid out when someone leaves — that is generally not OTE.
• Forgetting that paid leave taken while still employed generally is OTE.

How this works in myaccountant¶

Key points¶

• Super is worked out on OTE, so "does it attract super?" means "is it OTE?"
• Broadly in: ordinary hours pay, over-award payments, many allowances, commissions, paid leave taken while employed, some bonuses.
• Broadly out: overtime, expense reimbursements, unused leave paid on termination.
• Expense allowances are generally out; allowances that are extra pay are generally in.
• The tricky pay items each have their own lesson — check there before you decide.

Learn next¶

• Ordinary time earnings (OTE)
• Overtime and super
• Common calculation mistakes

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