Private ruling: Administratively Binding Advice - Superannuation Guarantee
Published: June 2012

Ruling: Superannuation Guarantee Ruling SGR 2009/2 - Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' (SGR 2009/2) explains the meaning of OTE as defined in subsection 6(1) of the SGAA. The definition of OTE is relevant to employers for the purpose of calculating the minimum level of superannuation support required for individual employees under the SGAA. | In paragraph 7 of SGR 2009/2 the Commissioner has ruled that an amount can only be part of OTE if it is 'salary or wages' of the employee. | In paragraph 72 of SGR 2009/2 the Commissioner has ruled that expense allowances, that is, those allowances paid to an employee with a reasonable expectation that the employee will fully expend the money in the course of providing services, are not 'salary or wages'. | In this particular case the allowance would represent an expense allowance as it is paid with the reasonable expectation that the employee will fully expend the money in the course of providing services. | The allowance would therefore not be part of OTE because it is not considered to be 'salary or wages' and it can only be part of OTE if it is 'salary or wages' of the employee.

Relevant facts and circumstances: An employee receives an income packaged salary plus superannuation. An annual allowance is paid to this employee on a pro rata basis monthly. The employment contract with this employee states that the salary would attract superannuation and that the allowance would not be subject to superannuation included on or on top of this amount. The allowance is paid to the employee and it is given with the expectation that the employee would be expending the whole amount of the money around the employee's employment. The employee has signed a statement that states the amount will be fully expended on matters relating to the employee's employment and that the allowance falls short of the employee's actual current expenditure. Advice



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