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Does your employer have to pay super on any bonuses you earn?
The answer for the most part is that employers do pay super on bonuses and other ordinary time earnings1, but there is a situation in which employers are not required to pay super on bonuses.
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.
Bonuses can be paid for a range of reasons, usually at the discretion of your employer, but they can also be an integral part of an employment contract. Some common ways to earn bonuses include:
Whether your employer is required to pay super on the money you receive as a bonus depends on whether you have earned the bonus during your normal hours of work.
Under the terms of Australia’s Superannuation Guarantee, from 1 July 2022 employers must pay a minimum 10.5% of an employee’s ordinary time earnings (OTE) into their nominated superannuation account. Employers can choose to pay more if they wish.
OTE means the money you would earn during your designated work hours. That includes things such as leave loading, shift allowances, back pay, commissions, and bonuses.1
So, if you have earned your bonus because of the work you have done during those regular hours, your employer must also pay a minimum of 10.5% of that amount into your designated super fund.
However, the same does not apply if you are being paid a bonus for work you have done wholly during overtime hours that is not deemed OTE.
Employers are not required to pay super on overtime worked that is not OTE2. It follows, then, that your employer is not required to pay super on a bonus that has been earned from work done during that overtime.
Bonuses, even if they are earned during overtime hours, present an opportunity to grow your super balance.
While bonuses calculated on sales targets or revenue numbers can sometimes be anticipated to form a large part of a person’s pay, other bonuses (Christmas bonus, sign-on bonus) may offer the opportunity to boost your retirement fund.
Money earned from an anticipated bonus could possibly allow you to salary sacrifice, some of your regular income, 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 has the additional benefit of reducing the amount of income tax you pay.
Another option is to make after-tax voluntary contributions to your super account, although eligibility conditions apply. 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 (known as 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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