Many Australians work and earn overtime, often to supplement their income or because it’s a requirement of their role.
You might be curious about how your superannuation and overtime correspond, and whether super is paid on overtime. Super generally isn’t paid on overtime as it’s not counted as Ordinary Time Earnings (OTE)—however, there are exceptions.
What counts as Ordinary Time Earnings (OTE)?
To better understand superannuation and overtime, it helps to know what’s meant by OTE. Your OTE is the amount you earn for your ordinary hours of work, generally including things like:
- leave (annual, sick, long service). This doesn’t include lump sum payments made on termination of employment in lieu of unused sick leave, an unused annual leave payment or an unused long service leave payment
- shift loadings
- allowances (such as danger allowance or on-call allowance)
- back pay
- commissions
- bonuses.
It’s important to note that if one of the above payment types relates to work performed outside of ordinary hours, it may not be OTE.
Your employer is required to pay 11.5% of your OTE into super as of the 2024-25 financial year. This is known as the superannuation guarantee (SG).
Payments not counted as OTE generally include:
- overtime
- reimbursements
- fringe benefits
- expense allowances
- parental leave.
Head to the ATO website for a detailed list of payments that count as OTE.
Exceptions: When you can get paid super on overtime
There are exceptional circumstances where overtime is considered OTE, and hence super is paid on overtime. These include:
- if overtime hours can’t be clearly defined, then all hours may be considered OTE
- casual loadings, which are generally paid to casual employees to compensate for lack of guaranteed hours and benefits
- when a business has registered an agreement that overrides an industry or occupation award, and the agreement stipulates that super is paid on overtime
- where you’re paid piece-rates, which may be treated the same as OTE for SG purposes.
How you can use overtime pay to grow your super
Salary sacrificing
One way to grow your super using your overtime payments is through salary sacrificing, which would see part of your pre-tax salary go into super on top of your SG. You can speak to your employer to set this up and determine how much you want to put into super. These super contributions are taxed at 15%, which is generally a lower rate than income tax. There’s a maximum amount of before-tax contributions you can contribute to your super each year without contributions being subject to extra tax. For the 2024-25 financial year, the cap is $30,000.
After-tax contributions
Another way you could grow your super using your overtime payments is through after-tax contributions, whereby you can contribute extra after you’ve been paid as a one-off or recurring payment. You might be able to claim a tax deduction on these contributions. There’s a maximum amount of after-tax contributions you can contribute to your super each year without contributions being subject to extra tax. For the 2024-25 financial year, the cap is $120,000.