I am paying my employees a bonus - do I need to pay superannuation in respect to the bonus?
Superannuation is payable on an employee's Ordinary Time Earnings ("OTE"). Ordinary Time Earnings are simply the payments employees earn in respect to their ordinary hours of work. An employee's ordinary hours can be referenced in an industrial award, an agreement with the employer or by statute. In the absence of any of these references OTE is determined by the hours actually worked including any paid leave, but excludes overtime.
In your example, the payment of a bonus will fall within the definition of OTE as the bonus payment has a direct correlation between the performance of services and the bonus payment.
Other types of payments that are included in OTE include:
• payments in lieu of notice
• payments for annual leave taken
• sick leave or long service leave taken directors fees, and commissions
• Specific exclusions to OTE and payments on which superannuation is not payable are overtime payments, annual leave loading payments, redundancy payments, dividends and payments made when on maternity or paternity leave.
For example, an employee takes annual leave over Christmas and is paid $1,000 for the week she is on leave; in addition a leave loading payment is made of $175. At this time the employee also receives her bonus payment for the year of $500. The OTE component of this payment is $1,500 of which $135 needs to be contributed to superannuation. The $175 loading is specifically exempt from superannuation.
Currently the minimum rate of superannuation payable is 9% of OTE which must be paid by the 28th day of the end of the quarter in which the OTE payments are made. Failure by you as an employer to make the payment by the due date will result in you being assessed for a superannuation guarantee shortfall, which is administered by the tax office. What this effectively means is that you will need to pay the superannuation amount plus penalties and the late payment will be non deductible to you.