Can I get super on bonus payments?

Whether you’ve received a bonus from your employer or are an employer giving one to an employee, it could be helpful to understand what the different types of bonus payments are, and which ones attract super contributions.

If you’ve received bonus super contributions from your employer, it might not make a massive impact on your super balance. But, for people whose bonuses are calculated based on factors such as sales targets or revenue numbers, your bonus—and potentially any accompanying super—could add up to quite a hefty amount and make up a substantial part of your income. Additionally, for some top-level executives, it’s not uncommon to receive up to half your annual salary or more as a yearly bonus.

What are bonus payments?

A bonus is a payment made to an employee, often to recognise and thank them for their performance or service in the workplace. Bonuses are typically also designed to incentivise and boost employee productivity and morale. While they’re often given at the discretion of the employer offering them, bonuses can be contractual in some cases.

Bonuses can be given for a number of reasons and to mark various milestones. For example, they can include end-of-year bonuses, sales bonuses, performance bonuses, sign-on bonuses for persons beginning their employment or starting other agreements, and retention bonuses for employees who stay with their employer for an agreed period.

How a bonus is calculated is likely to depend on your employer. For instance, bonuses could be determined based on the employee’s position and salary, or on their individual performance. Some employers consider the performance of the company as a whole when determining bonus payments, while others may give employees the same bonus across the board.

Related: How to work out if you’re being paid correctly

What payments do employers have to pay superannuation on?

Employers must pay eligible workers (employees or contractors) Superannuation Guarantee (SG) contributions based on their ordinary time earnings (OTE), regardless of how much they are paid, according to the Australian Taxation Office (ATO).

For workers that are 18 years or older, Super Guarantee contributions are paid no matter how many hours they work. If they are under 18, Super Guarantee contributions are paid if they work more than 30 hours per week.

In other words, employers must pay super on what an employee earns for their ordinary hours of work, which, depending on the employee, may include certain allowances, annual leave, sick leave and certain types of bonuses. So, whether an employer must pay super on bonus payments will depend on whether the bonus is within the employee’s OTE.

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What bonus payments do employers have to pay superannuation on?

The ATO sets out which payments are part of an employee’s ordinary time earnings (OTE) and therefore attract super payments. It says in most cases, bonus payments are OTE.

So, for example, a performance bonus given to reward an employee for their strong results achieved during the year will be considered OTE. Christmas bonuses, sign-on bonuses, retention bonuses and discretionary bonuses are also all typically included as OTE.

The only exception are bonus payments that relate solely to work performed entirely outside of the employee’s ordinary hours. For example, a bonus to recognise a project undertaken by an employee during overtime hours would not be part of OTE and so would not require super payment.

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Where employers pay super on bonus payments

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Source: ATO

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