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Does your employer have to pay super on any overtime you’ve worked? It’s a common question, especially for workers who receive overtime payments.
The short answer is no – but it’s worth having a thorough understanding of how your pay is made up because super, as a minimum, must be paid on just ordinary time earnings (OTE), including commissions, leave loading, back pay and bonuses.1
It is important to note, however, that some employers, including the Queensland Government, have different contribution arrangements and, in those cases, employer obligations may differ from those outlined here.
Many professions give people the opportunity to work overtime, such as nurses, police officers, and corrections staff.
But, generally, your employer is not required to pay superannuation on the portion of your pay earned from working overtime. This is because overtime payments are not OTE, provided your ordinary hours of work are clearly identified in an award or agreement.But, generally, your employer is not required to pay superannuation on the portion of your pay earned from working overtime.2
At the centre of Australia’s super system sits the Superannuation Guarantee, which stipulates that employers must pay a minimum 10.5% of an employee’s OTE into their designated superannuation account.
OTE means the money you would earn during normal work hours. Overtime, even if it is regular, frequent or bundled up into a salary package, is not considered to be OTE.
Many other things are though, including:
The Australian Tax Office has a comprehensive checklist of payments that are OTE.
Knowing how your wages are made up allows you to monitor whether you are receiving all of your super entitlements.
And while the amount of overtime you earn is not reflected in the sum your employer contributes to your super account, there are still opportunities to use that extra money to grow your retirement nest egg.
Money earned from working overtime could possibly allow you to salary sacrifice voluntary contributions, which can be a tax-effective way of saving for the future.
This means paying money into your super from your before-tax salary, which may have the additional bonus of reducing the amount of income tax you pay.
Another option is to make periodic after-tax voluntary contributions to your super account from overtime earned. Also known as non-concessional or personal contributions, these after-tax payments can be made up until you turn 75. See our Personal Contributions Guide for more information.
Even small amounts paid regularly into super this way can have an impact on your retirement balance when it comes time to wind down your working life. It is important to be aware that there are some limits to how much you can contribute to your super fund each year (contribution caps). If you go above these limits, you may pay extra tax.
Simply log in to Member Online or download the QSuper app
1.Australian Tax Office, updated 26 May 2021, List of payments that are ordinary time earnings, accessed 7 June 2022 at ato.gov.au
2 Australian Tax Office, updated 1 September 2021, How much super to pay, accessed 7 June 2022 at ato.gov.au
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