When calculating your super guarantee obligation, you must consider the whole of an employee’s Ordinary Time Earnings (OTE). This article describes how to determine the payments that contribute to OTE and how to check and update your pay elements, if required, to ensure your OTE calculations are correct.
Identifying the pay elements to include in OTE
For general guidance on which payments are considered salary or wages and whether they are considered part of ordinary time earnings (OTE) for super guarantee purposes, talk to your advisor or refer to the ATO page: List of payments that are ordinary time earnings | Australian Taxation Office (ato.gov.au)
Reviewing your pay element setups in Attaché Payroll
Once you've established which payments contribute to ordinary time earnings, you need to check whether your pay elements (income types, allowances and deductions) are set up correctly for OTE. If you have more than a handful of pay elements, the easiest way to do this is by using the List Wizard to create a report.
Use the List Wizard to review your income types
Choose Setups, Payroll, Income Types, Maintain.
Choose Find (F2) followed by Output (F11) to open the List Wizard.
In the column heading area of the report, locate the inclinote column.
The Y or N (Yes or No) flag in this column shows whether the Include in OTE check box has been selected for a pay element.
If you can't see this column then choose Add Columns, select it from the list of fields and double-click to add it to the report.
Review the report and for each income type that is to be included in OTE, check if the OTE flag is set to Y. Make a note of any income types that are not set up with the correct OTE flag, as you'll need to update these (as described below).
Repeat the steps above to review your allowances (Setups, Payroll, Allowances, Maintain) and deductions (Setups, Payroll, Deductions, Maintain).
Updating your pay elements (if required)
If you've identified any pay elements that have not been correctly flagged as OTE, follow these instructions to update them:
Setups, Payroll, Income Types, Maintain and Setups, Payroll, Allowances, Maintain.
In both Income Type Maintenance and Allowance Maintenance, select the Include in OTE check box to include the pay element as income for the calculation of OTE.
Setups, Payroll, Deductions, Maintain.
In deduction maintenance, if a deduction is to reduce the employee's income for the calculation of the SG contribution, set the Part of OTE check box to Yes.
Example
Assuming an income of $1,000, allowances of $200 and a deduction of $350, superannuation will be calculated on an amount of $850 (that is, $1,000 + $200 - $350). If the percentage set in Deduction Maintenance (or Employer Contribution/Super Maintenance) is 9.5%, then the deduction (or contribution) will be 9.5% of $850, which equals $80.75.