I receive a regular annual bonus from my employer, I am aware that this is classified as OTE. I am seeking to verify whether it is legitimate for the employer to be deducting and paying superannuation from the bonus? I believe it should be paid in addition to the bonus payment, in the same manner as my base salary?
Can someone verify the rules around this.
Hiya @tax_professor 👋
There are legitimate circumstances where an employer may offer an employee a "Total Cost of Employment" (TCE) package that INCLUDES the super guarantee contribution. They are the minority as they are complex (I dislike them intensely).
It would be stipulated in the employment contract and the bonus policy of the employer would specify the different contract arrangements for SG.
I have clients who do this (and get themselves into a pickle on occasion), where, for example, they offer:
Most employers offer salary packages that are exclusive of SG. This is the standard remuneration arrangement. Using the example above, the employer would offer:
If your contract or bonus policy doesn't state explicitly about your salary including SG, then the Fair Work Ombudsman has a very narrow approach to permissible deductions from an employees' pay.
Some employers deduct SG from commissions, even though commissions are OTE and the salary packages are exclusive of SG, because they are trying to contain costs - by contravening their legislative obligations. SG is not an area to play fast and loose with, given the penalties.
When you marry up the complex Fair Work requirements with the complex ATO requirements, things get tricky! 🫣
Deanne
Hiya @tax_professor 👋
There are legitimate circumstances where an employer may offer an employee a "Total Cost of Employment" (TCE) package that INCLUDES the super guarantee contribution. They are the minority as they are complex (I dislike them intensely).
It would be stipulated in the employment contract and the bonus policy of the employer would specify the different contract arrangements for SG.
I have clients who do this (and get themselves into a pickle on occasion), where, for example, they offer:
Most employers offer salary packages that are exclusive of SG. This is the standard remuneration arrangement. Using the example above, the employer would offer:
If your contract or bonus policy doesn't state explicitly about your salary including SG, then the Fair Work Ombudsman has a very narrow approach to permissible deductions from an employees' pay.
Some employers deduct SG from commissions, even though commissions are OTE and the salary packages are exclusive of SG, because they are trying to contain costs - by contravening their legislative obligations. SG is not an area to play fast and loose with, given the penalties.
When you marry up the complex Fair Work requirements with the complex ATO requirements, things get tricky! 🫣
Deanne
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