Personal Income Tax

What Are Ordinary Time Earnings And How Do They Affect My Super?

Your employer has to make a contribution to your superannuation fund. This is called a superannuation guarantee, and the amount is based on your earnings. It sounds straightforward but as an employee you will know that a lot of things make up the money that you receive from your employer - your salary, bonuses, overtime, any allowances you are paid, leave payments, etc. So, how is the superannuation guarantee worked out? This is done on ordinary time earnings.

Put simply, the Australian Tax Office (ATO) has put together a list of all of the things that your employer could give you money for - some of them are listed above. It then states whether the employer should take these things into consideration when calculating the minimum superannuation guarantee amount.

In general, this means that your salary, allowances, commissions and bonuses are used in the calculation, but your overtime is not.

It is important to note that this distinction between your normal hours, or ordinary time earnings, and your overtime hours is only applicable for calculating the superannuation guarantee. You are still liable for income tax on your overtime hours.

Overtime payments for the purposes of working out the ordinary time earnings can take any form - hourly rates, loading, lump sums paid annually, etc. If, however, the overtime amount of money is not clearly identifiable, or a distinction between overtime hours and other hours is removed, that money must then be included in the superannuation guarantee calculation.


What Is Included And What Is Not? 

The ATO publishes a detailed list of what payments are included in ordinary time earnings, and what are not. Here is a summary of the most common payments that are included:

  • Hours where there is no clear distinction between ordinary and overtime, or where the distinction has been removed
  • Where no ordinary hours of work are stipulated - in this situation, all hours are regarded as ordinary
  • Shift-loading payments for casual employees
  • Most allowances, including danger allowances and retention allowances
  • Return to work worker's compensation
  • Annual leave payments
  • Payment in lieu of notice on termination of employment
  • Most bonus payments


The most common payments that are not included are:

  • Overtime hours, including for casual employees
  • Expense payments - reimbursed expenses etc.
  • Parental leave
  • Ancillary leave (jury duty etc.)
  • Unused annual leave payments on termination of employment
  • Bonus paid in respect of overtime worked

The theory behind ordinary time earnings is that you are treated the same as other employees when your employer makes a contribution under the superannuation guarantee. If you rely heavily on overtime to make up your monthly income, however, you should be aware of these rules. For most other people the potential impact is minimal, unless you go through a period of working significant amounts of overtime.

Finally, it is important to note that your employer is under an obligation to keep a clear record of the super that they have paid you, and how they worked this amount out. They have to keep these records for a minimum of five years.




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