Ordinary Time Earnings

Superannuation guarantee calculations must be based on an employee's Ordinary Time Earnings (OTE), which you can derive by either of the following methods:

1. Set up every allowance that is included in ordinary time earnings with Allowances | Details (iii) tab | Use in Super OTE = "Yes" (standard method). See http://www.ato.gov.au/Business/Employers-super/In-detail/Calculating-and-paying/Using-ordinary-time-earnings-to-calculate-the-super-guarantee/

   Important: Ensure that only OTE allowances have Use in Super OTE = "Yes" or your superannuation calculations will be based on an incorrect Quantity value.

2. Set up an allowance group that contains all ordinary time earnings allowances (allowance group method).

Standard Method

We recommend that you use this standard 'ordinary time earnings allowances' method, which uses the total ordinary time earnings (less salary sacrifice amounts) in superannuation calculations.

Note: If you do not want to reduce ordinary time earnings (or salary and wages) by the salary sacrifice amounts, then use the allowance group method.

1. Use superannuation allowances with Calculation method = "G. Percentage of gross".
2. Use superannuation deductions with Calculation method = "P. Percentage of gross".
3. Derive ordinary time earnings from allowances with Use in Super OTE = "Yes".

   For example:

   

This manual uses the standard method.

Important: Ensure that only OTE allowances have Use in Super OTE = "Yes" or your superannuation calculations will be based on an incorrect Quantity value.

Allowance Group Method

Use the allowance group method if you require different sets of OTE allowances for different types of employee contracts, such as shift workers and salaried employees.

1. Ensure that all allowances have Use in Super Calculations = "No".
2. Create a non-paying allowance to count superable OTE. Payroll rules can use this allowance as an accumulator to create superannuation transactions:
   • Details (i) tab | Paying = No.
   • Details (i) tab | Unit rate = 1.0000.
   • Details (iii) tab | Use in Super Calculations = "Yes".

     Important: Ensure that this allowance is the only allowance with Use in Super OTE = "Yes".

3. Use superannuation allowances with Calculation method = "A. Super calc with monthly minimum".
4. Use superannuation deductions with Calculation method = "I. Percentage of allowance group".
5. Set up salary sacrifice as allowances or use a payroll rule adjustment to reduce the salary sacrifice deduction values.
6. Create appropriate "Total" allowance groups to derive ordinary time earnings for each set of employees. For example, shift employees may have a different set of allowances to salaried employees.
7. Set up payroll rules to:
   1. Create the OTE allowance transaction from the allowance group (one payroll rule per allowance group)
   2. Create an OTE allowance transaction with a negative amount to reduce salary sacrifice.

Topic: 25262