Do you pay super on bonuses?

The balance of your superannuation fund will likely play a significant role in determining your lifestyle after you retire. Therefore, many employees strive to ensure they can collect as much super as possible during their working lives.

Considering superannuation is usually paid based on your fixed salary, if you receive bonuses, you may question if super is paid on those bonuses. 

Usually, the answer is yes; any bonus payments you receive from your employer will impact the assessment of how much your superannuation payments should be. But, there are some exceptions to this. 

To understand what you’re entitled to, it’s a good idea to understand the different bonus types and when an employer will pay superannuation on a bonus.

Paying superannuation on bonuses

According to the ATO’s list of payments that attract superannuation contributions, bonus payments are included in an employee’s ordinary hours of work, including things like commissions and shift loadings, also known as OTE.

So, if you’ve earned a performance bonus for results achieved during the year, the bonus will be considered part of your OTE. You will receive superannuation contributions on that bonus.

In most cases, bonuses that are part of the employee’s OTE include sign-on bonuses, discretionary bonuses, retention bonuses, and others. 

When does an employer need to pay superannuation? 

Employers must pay superannuation to all their employees over the age of 18, and those under 18 but working more than 30 hours per week. 

The amount contributed is based on the employee’s ordinary time earnings (OTE) or regular work hours, as guided by the Australian Taxation Office (ATO). The employee will receive super contributions for their ordinary work hours, including certain allowances like annual leave, sick leave and some bonuses.

The amount you the employer must pay is based on the Superannuation Guarantee (SG) rate for that financial year. It was previously held at 9.5 per cent, and is now scheduled to rise each year until it reaches 12.0 per cent in 2025-26. Visit the ATO website for information on the latest SG rate.

Are there exceptions when it comes to paying super on bonuses? 

While the bonuses mentioned above are part of an employee’s OTE, the same doesn’t apply if the bonus is for work done wholly during overtime hours.

Any bonus awarded to an employee for work done outside working hours will not be included when calculating superannuation contributions. This is because, in most cases, superannuation is not paid for any extra hours or overtime work. 

When is superannuation paid for overtime? 

As mentioned above, overtime is usually exempt from super contributions as it falls outside the OTE. However, there are some instances you might receive superannuation for overtime, like: 

• When the employment agreement overrides an award, which removes the distinction between ordinary and other hours.
• When the employee receives an on-piece income or is paid for a piece of work or unit instead of the hours worked, and no specific ordinary hours of work are determined.
• A casual employee receives superannuation on shift loadings which are paid in place of benefit such as paid leave.

For example, doctors tend to receive superannuation contributions for danger and on-call allowances. 

Does the contribution base impact the superannuation for bonuses?

In most cases, bonuses paid do not impact the superannuation contribution base. The superannuation contribution base is used to identify the most an employer is legally required to pay as part of the super guarantee for that fiscal year.

For example, in the financial year 2020-21, the base was $57,090 per quarter. Any and all income, including salary and bonuses that exceed $57,090 in that quarter, aren’t considered when assessing the super guarantee contribution. 

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