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SuitUp(Newbie)Newbie
18 Aug 2025

Hi there,


We have an employee who will be paid their regular earnings for the fortnight, annual leave payout, bonus, and payment in lieu of notice (PILON). When we factor in these payments along with the superannuation already paid this quarter, the total superannuation may exceed the maximum quarterly cap.


My question is, does the superannuation quarterly cap exclude PILON, or is it included because PILON is part of Ordinary Time Earnings (OTE)? In other words, will the employee miss out on superannuation for any amount above the cap?

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3 replies
149 views
3 replies

All replies

PayrollDeanne(Taxicorn)Taxicorn
18 Aug 2025

Hiya @SuitUp ๐Ÿ‘‹


Unused leave on termination is not OTE, as per the recently updated ATO guidance ๐Ÿ˜‰


See the definition of OTE on the recently updated ATO guidance that caps OTE at the MCB.


Employers may choose to pay above the minimum SG obligation, but amounts in excess of the MCB are not OTE ๐Ÿค“


Deanne

SuitUp(Newbie)Newbie
20 Aug 2025

Thanks Deanne, I was aware of Unused Annual Leave not being OTE, it was more around the PILON payment being OTE and being part of the Superannuation Quarterly Cap, which it sounds like it is. Which means the employer is not obligated to pay excess superannuation that would have been paid with the PILON. Or is this not correct?

Thanks!

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PayrollDeanne(Taxicorn)Taxicorn
20 Aug 2025

I explained that, @SuitUp ๐Ÿ˜‰ Think of it like "OTE amounts" rather than the specific payment. That is, adding up ALL OTE paid in the quarter, capped at the MCB. It doesn't matter about the specific payment that's OTE, once the OTE is capped, no more OTE added. Did you see the ATO example of MCB capping on their updated guidance?


Deanne

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Is In Lieu of Notice payments subject to the Superannuation Quarterly Cap? | ATO Community