Whether your employer must pay superannuation on a bonus depends on the nature of the bonus. The key concept is whether the bonus forms part of ordinary time earnings (OTE) — the base used to calculate Super Guarantee (SG) contributions.
The General Rule
The Super Guarantee (11.5% in FY2024–25) applies to ordinary time earnings — the payment made for ordinary hours of work. A bonus attracts SG if it is paid in connection with ordinary hours worked, and does not attract SG if it relates to overtime hours or is structured as a one-off payment unrelated to ordinary work.
When Is Super Payable on Bonuses?
Super is generally required on bonuses that are:
- Paid for performance during ordinary hours (e.g., sales targets achieved through regular hours)
- Paid as part of a regular remuneration structure (e.g., quarterly KPI bonuses integral to the employment package)
- Described in an employment contract as part of total employment cost (TEC) or total remuneration
- Paid for work related to the ordinary duties of the role
Examples where super is generally required:
| Bonus type | OTE? | Super required? |
|---|---|---|
| Sales commission on ordinary hours | Yes | Yes |
| KPI bonus for ordinary hours performance | Yes | Yes |
| Bonus included in employment contract as part of TEC | Yes | Yes |
| Discretionary bonus paid regularly as part of remuneration | Generally yes | Generally yes |
When Is Super NOT Payable on Bonuses?
Super is generally not required on bonuses that are:
- Purely discretionary and one-off (e.g., a goodwill payment, a loyalty bonus)
- Paid specifically because of overtime performance
- Reimbursements for expenses
- Redundancy payments or genuine termination payments
| Bonus type | OTE? | Super required? |
|---|---|---|
| Discretionary one-off goodwill bonus | No | No |
| Bonus explicitly for overtime work | No | No |
| Redundancy payment | No | No |
| Sign-on bonus (no ordinary hours connection) | Generally no | Generally no |
The ATO’s Position
The ATO has ruled that the SG applies where the bonus is paid in relation to ordinary hours of employment, with the key test being whether the payment would have been made but for the employee working their ordinary hours. The ATO’s ruling SGR 2009/2 is the primary reference for employers.
For ambiguous bonus structures, employers should obtain payroll advice and document the nature of each bonus type clearly.
Impact on Your Super
If your income includes a significant bonus component, knowing whether super is paid on it can have a material effect on your retirement savings:
Example:
- Base salary: $100,000 (super paid on this — $11,500 SG)
- Annual bonus: $30,000
If super is payable on the bonus:
- Additional $3,450 SG per year
- Over 25 years at 7%: approximately $220,000 additional super
If super is not payable, you may wish to voluntarily salary sacrifice a portion of the bonus into super to capture a tax advantage.
Frequently Asked Questions
My employer says super is not payable on my bonus. Is this legal? It depends on the bonus type. If it is a discretionary one-off payment, this may be correct. If it is a regular KPI bonus linked to ordinary hours, the employer may be wrong. Review the ATO’s OTE guidance or speak with an employment lawyer or the Fair Work Ombudsman.
Can I voluntarily put my bonus into super? Yes — you can make a personal concessional contribution (with a Notice of Intent to claim a deduction) or non-concessional contribution from your bonus income. This is a common tax strategy for high-income employees in bonus-heavy roles.
Does salary packaging change how super applies to bonuses? Salary packaging (sacrifice) can affect base super calculations depending on how your package is structured. Review your employment contract for clarity on what super is calculated on.
For more: Super on Overtime, Salary Sacrifice Super, Concessional Contribution Cap, Ordinary Time Earnings Explained. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.