Annual leave loading included in Superannuation Guarantee payments
Members are advised that the Australian Taxation Office (ATO) has updated its Ordinary Time Earnings (OTE) checklist on its website for annual leave loading, to align with its 2009 public ruling which noted that annual leave loading is always OTE “unless demonstrably referrable to a notional loss of opportunity to work over time.”
The website clearly states that in all other circumstances annual leave loading is OTE and therefore subject to Superannuation Guarantee (SG).
Superannuation Guarantee and Leave Loading
SG is the minimum super that an employer must pay each quarter for each eligible employee.
Currently, SG is 9.5% of OTE.
OTE is the amount an employee earns for their ordinary hours of work.
Among other things, it includes commissions, shift loadings and allowances, but not overtime payments.
Annual leave loading is a lesser known entitlement that applies to a large number of Australian workers covered by most Modern Awards and enterprise agreements.
In the majority of Modern Awards, Annual Leave Loading is 17.5% on top of an employee’s ordinary pay.
PwC have said that based on their experience with pay code reviews, some employers are incorrectly not paying superannuation on annual leave loading.
Talk to your employer
Annual leave loading and SG are the responsibility of the employer.
Some employers have indicated they will audit previous payment summaries to identify discrepancies; however, the ATO has indicated that it will not be proactive in relation to previous compliance.
Members should meet with their employer to discuss any concerns regarding SG payments and annual leave loading.