ATO Community

Is leave loading payment superable

Ask a question

may
Newbie

Views 35378

Replies 4

I am getting conflicting information regarding whether super is payble when paying annual leave loading.  Please help. Thanks

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

ATO Certified

Community Support

Replies 3

Hi @may,

 

Welcome to our Community!

 

Generally speaking, Ordinary time earnings (OTE) are what employees earn for their ordinary hours of work. The employer is required to pay super on OTE once the earnings are actually paid to the employee.

Not all payments that form part of salary or wages form part of OTE. Whilst an annual leave payment forms part of OTE (for current employees on leave), the treatment of the annual leave ‘loading’ can be a little bit more complex.

 

Under the Super Guarantee legislation (SGR 2009/2) an annual leave loading is not considered OTE if it relates to a notional loss of opportunity to work overtime. If there are sufficient facts to establish that the purpose of the annual leave ‘loading’ is not for overtime related reasons, it can be considered OTE.

 

We can provide you with general information here, but if you'd like more detail around your personal situation you can write to us to request a private ruling. Private rulings are written advice on how we think tax and super law applies to your circumstances. It's a free service, and we usual provide a response within 28 days. Please remember to include information about your award and any industrial agreements you have in place with your employer when you send us your application.

 

Hope this helps.

 

 

4 REPLIES 4

Best answer

ATO Certified

Community Support

Replies 3

Hi @may,

 

Welcome to our Community!

 

Generally speaking, Ordinary time earnings (OTE) are what employees earn for their ordinary hours of work. The employer is required to pay super on OTE once the earnings are actually paid to the employee.

Not all payments that form part of salary or wages form part of OTE. Whilst an annual leave payment forms part of OTE (for current employees on leave), the treatment of the annual leave ‘loading’ can be a little bit more complex.

 

Under the Super Guarantee legislation (SGR 2009/2) an annual leave loading is not considered OTE if it relates to a notional loss of opportunity to work overtime. If there are sufficient facts to establish that the purpose of the annual leave ‘loading’ is not for overtime related reasons, it can be considered OTE.

 

We can provide you with general information here, but if you'd like more detail around your personal situation you can write to us to request a private ruling. Private rulings are written advice on how we think tax and super law applies to your circumstances. It's a free service, and we usual provide a response within 28 days. Please remember to include information about your award and any industrial agreements you have in place with your employer when you send us your application.

 

Hope this helps.

 

 

may
Newbie

Replies 0

Hi Jodie,

 

Thanks for the clarifiction. appreciated.

 

I'm new

Replies 1

Hi JodyH - ATO Community Support,

In your response it mentioned - If there are sufficient facts to establish that the purpose of the annual leave ‘loading’ is not for overtime related reasons, it can be considered OTE.

Is an individual being on salary with no overtime payment sufficient facts?

And how long has the Super Guarantee legislation (SGR 2009/2) been in effect?

Would like to know how far back to go with claiming super on leave loading.

TIA

ATO Certified

Community Support

Replies 0

 @susan_dillon

 

Welcome to our Community.

 

We recognise that there has been uncertainty for employers in determining if their annual leave loading is 'demonstrably referable' to a notional loss of opportunity to work overtime. In turn, we have a page on our website that provides some more clarity about this.

 

You can read more about this by referring to the ordinary time earnings – annual leave loading page.

 

The fact that an employee is in a salaried position with no overtime payments doesn't necessarily mean that the leave loading isn't related to overtime. The award, agreement, contract or workplace policy documents would need to be looked at to determine that.

 

Superannuation Guarantee Ruling SGR 2009/2 has been in place since the 2008-09 year. The ruling provides our most recent view about what payment types should be considered ordinary time earnings (OTE) for super guarantee (SG) purposes.

 

From 1 July 2008, OTE became the minimum earnings base all employers must use when working out how much super to pay.

 

Before that, an employer would use the earnings base specified in an award, employment agreement or the governing rules of their super fund to work out the SG contributions. If there wasn’t anything stated under any of these, then they would use OTE.

 

For more information about that, check out the following thread: OTE - Annual Leave Loading

 

If you think that you have been missing out on SG payments that you think should have been payable, we recommend that you speak to your employer. Depending on the outcome of that conversation, you can report your employer to us.

 

For more information about what we can do, have a look at the unpaid super page on our website.

 

It is important to note that generally we will not pursue unpaid super enquiries where the complaint is for a period more than five years ago. This is because employers are only required to keep employment records for five years. In saying that, there are times when we can if you are able to provide us with some documentation.

 

For more information about that, you can refer to the documentation if your enquiry is from over five years ago section of the unpaid super page.

 

Hope this helps.

 

Thanks,

 

ChrisR

Top Solution Authors