The Australian Government has legislated that employers must, as a minimum, consider the whole of an employee’s Ordinary Time Earnings (OTE) when calculating their Super Guarantee (SG) obligation. This requirement took effect on 1 July 2008 using the Australian Taxation Office’s (ATO) definition of what constitutes OTE.
Setting up Super Guarantee contributions is a two-step process:
Setting up an employer Super Guarantee contribution based on Ordinary Time Earnings (OTE)
Establishing which income types, allowances and deductions to include in OTE. See the ATO page: List of payments that are ordinary time earnings | Australian Taxation Office (ato.gov.au)
Setting up an employer Super Guarantee contribution based on Ordinary Time Earnings (OTE)
Go to Setups, Payroll, Employer Contributions, Maintain.
Enter the Contribution Code as SG or SGC, and the Description as Super Guarantee or similar.
Select the Type as % of OTE (Ordinary Time Earnings).
Set Contribution Type Code as SG.
Set the Contribution Category as Superannuation (Award).
Enter the percentage rate in the Percent field as per the current ATO specified percentage rate.
Enter the Quarterly Value Maximum as per the current ATO specified QVM amount.
Select the following checkboxes:
Show rate on Pay advice.
Show on Pay advice.
Use Employee Other Accounts.
📌Note: if this option is NOT selected, you will not be able to link to Employee Super/Other Accounts in the employee Standard Pays, or employee timesheets, in order to record and pay Super contributions.
Move to the GL Posting Details tab and enter the relevant info (if you use Attaché Accounts and General Ledger, or export transactions to an external General Ledger program).
Move to the Multiple GL Dissections tab and enter the relevant details if you use this section.
Click Accept(F9) to save the setups.
Establishing which income types, allowances and deductions to include in OTE
After you have set up the contribution type you need to establish which income types and allowances are included in the employee’s income and which deductions reduce the employee’s income for the calculation of the SG contribution.
For further information see: Ensuring correct Ordinary Time Earnings (OTE) pay elements.