Are Bonus Payments Considered 'Ordinary Times Earnings'?

By: Rogerson Kenny Business Accountants Melbourne  01-Oct-2008
Keywords: Accountants, Accounting Services, Accounting

Are Bonus Payments Considered 'Ordinary Times Earnings'?

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  1. 'Ordinary Times Earnings' is the method that must be used to calculate the minimum superannuation guarantee contributions for employees.

  2. Ordinary times earnings is defined under superannuation law as generally being what an employee earns for their ordinary hours of work, including:

    - over-award payments,
    - commissions,
    - allowances, and
    - paid leave.

  3. In the recent case, the AAT found that the superannuation guarantee Charge applied to performance-based bonus payments made to various employees of a debt recovery business.

  4. In making its decision, the AAT said that although a satisfactory level of performance was required to be eligible for the bonus, it was still regarded as part of an employee's salary.

  5. The AAT also found that the nature of the bonus payments was related to the employees ordinary hours of work, i.e., the payments were based on the work performed during an employee's ordinary work.

  6. As such, the AAT found that the bonus payments were within the definition of "ordinary times earnings", and should have been included when calculating the superannuation guarantee charge for employees receiving the bonus.
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Keywords: Accountancy, Accountants, Accounting, Accounting Products, Accounting Services, Advice, Advisory, Finance, Fringe Benefits Tax, Gst, Payg, Self Managed Superannuation Funds, Tax Accounting, Tax Agent, Taxation

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