Ordinary time earnings (for Super guarantee purposes)

The Tax Office has released a Draft Superannuation Guarantee Ruling in which it states the Commissioner’s preliminary view on whether payments to employees are ordinary time earnings (OTE) and/or ‘salary or wages’.

Since 1 July 2008, employers are required to use OTE in calculating the superannuation guarantee (SG) for their employees.

If employers provide less than the required SG or pay the SG late, they will be liable to pay a non-deductible SG charge which is calculated using salary or wages.

While the Draft has not significantly departed from the Commissioner’s established view, his view relating to certain payments appears to have changed.

The Draft states that Christmas bonuses do not form part of salary or wages. However, the Commissioner currently considers these bonuses to be included in salary or wages.

The Draft also states that maternity leave and jury duty leave payments are OTE. Currently, the Commissioner considers that these leave payments do not form part of OTE.