Ordinary time earnings (OTE) is the concept used by the ATO to determine which payments made to employees attract the Super Guarantee (SG). Employers must pay SG contributions (11.5% in FY2024–25) on OTE — not on total remuneration.
Why OTE Matters
OTE is the denominator in the SG calculation. Using the wrong base is one of the most common payroll compliance errors in Australia. Underpaying SG due to incorrect OTE calculation can lead to the Super Guarantee Charge (SGC), which includes interest and an administration fee on top of the unpaid super.
What Is Included in OTE
| Payment type | Included in OTE? |
|---|---|
| Regular wages and salary for ordinary hours | ✅ Yes |
| Paid annual leave | ✅ Yes |
| Paid personal/carer’s leave | ✅ Yes |
| Long service leave | ✅ Yes |
| Loading on ordinary hours (e.g., shift loading for regular rostered shifts) | ✅ Yes |
| Casual loading (on ordinary hours) | ✅ Yes |
| Commissions for ordinary hours work | ✅ Yes |
| Bonuses for ordinary hours performance | ✅ Yes (generally) |
| Allowances forming part of regular remuneration | ✅ Yes |
What Is Excluded from OTE
| Payment type | Excluded from OTE? |
|---|---|
| Overtime pay | ❌ Excluded |
| Overtime loading | ❌ Excluded |
| Reimbursements for expenses | ❌ Excluded |
| Fringe benefits (non-cash benefits) | ❌ Excluded |
| Workers compensation payments | ❌ Excluded |
| Termination payments (other than leave entitlements) | ❌ Excluded |
| Redundancy payments | ❌ Excluded |
The ATO’s Ruling on OTE
The ATO’s primary guidance on OTE is Superannuation Guarantee Ruling SGR 2009/2. This ruling sets out the definition of OTE and provides examples. Employers should refer to this ruling when classifying pay components.
Key points from SGR 2009/2:
- OTE is what the employee is paid for their ordinary hours of work
- The ordinary hours of work are determined by the employment contract, award, or enterprise agreement
- If an employee’s contract does not specify ordinary hours, look at what the pattern of work actually is
Common Problem Areas
Bonuses
Whether a bonus is OTE depends on whether it is paid for ordinary hours. Regular, formula-driven KPI bonuses based on ordinary duties are generally OTE. Discretionary, one-off bonuses are generally not OTE.
Allowances
Allowances that compensate for additional expenses (e.g., a travel reimbursement) are not OTE. Allowances that are structural supplements to ordinary wages (e.g., a tool allowance built into the regular pay) may be OTE.
Penalty rates for overtime
Penalty rates are OTE when paid for ordinary rostered hours. Penalty rates paid specifically because hours are overtime are not OTE.
Part-time and casual workers
OTE for part-time workers is the pay for their ordinary (contracted) hours. For casuals, it includes the casual loading applied to their ordinary hours.
Maximum Super Contribution Base (MSCB)
Employers are only required to pay SG on OTE up to the Maximum Super Contribution Base (MSCB):
- FY2024–25: $65,070 per quarter ($260,280 per year)
- Contributions on OTE above the MSCB are not required (but are permitted)
Practical Employer Checklist
- Identify all pay components in the payroll system
- Classify each as OTE or non-OTE using SGR 2009/2
- Apply the 11.5% rate to the total OTE for each pay period
- Cap at the MSCB each quarter
- Pay within the required timeframes (currently quarterly by 28th day after quarter end; from 1 July 2026, payday super changes this to each payday)
- Document the classification rationale for audit purposes
For more: Super Guarantee Rate Schedule, Super on Overtime, Super on Bonuses, Super Guarantee Charge. For advice on your situation, speak with a licensed financial adviser or payroll professional via MoneySmart.