If you haven't already, take the OTE Quick Check to see if you are set up to report Ordinary Time Earnings (OTE) correctly for Single Touch Payroll. |
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Ensuring correct Ordinary Time Earnings (OTE) pay elements
When calculating your Super Guarantee obligation, you must consider the whole of an employee’s Ordinary Time Earnings (OTE). This topic describes how to determine the payments that contribute to OTE and how to check and update your pay elements, if required, to ensure your OTE calculations are correct.
Identifying the pay elements to include in OTE
For general guidance on which payments are considered salary or wages and whether they are considered part of ordinary time earnings (OTE) for super guarantee purposes, talk to your advisor or visit the Australian Taxation Office website: Checklist: Salary or wages and ordinary time earnings
Reviewing your pay element setups in Attaché Payroll
Once you've established which payments contribute to ordinary time earnings, you need to check whether your pay elements (income types, allowances and deductions) are set up correctly for OTE. If you have more than a handful of pay elements, the easiest way to do this is by using the List Wizard to create a report.
For example, to review your income types:
- Choose Setups | Payroll | Income Types | Maintain.
- Choose Find (F2) followed by Output (F11) to open the List Wizard.
- In the column heading area of the report, locate the inclinote column. The Y or N (Yes or No) flag in this column shows whether the Include in OTE check box has been selected for a pay element. If you can't see this column then choose Add Columns, select it from the list of fields and double-click to add it to the report.
- Review the report and for each income type that is to be included in OTE, check if the OTE flag is set to Y. Make a note of any income types that are not set up with the correct OTE flag, as you'll need to update these (as described below).
Repeat the steps above to review your allowances (Setups | Payroll | Allowances | Maintain) and deductions (Setups | Payroll | Deductions | Maintain).
Updating your pay elements (if required)
If you've identified any pay elements that have not been correctly flagged as OTE, follow these instructions to update them:
- In Setups | Payroll | Income Types | Maintain and Setups | Payroll | Allowances | Maintain, select the Include in OTE check box if an income type or allowance is to be included as income for the calculation of the SG contribution.
- In Setups | Payroll | Deductions | Maintain, if a deduction is to reduce the employee's income for the calculation of the SG contribution, set the Part of OTE check box to Yes.
For example, assuming an income of $1,000, allowances of $200 and a deduction of $350, superannuation will be calculated on an amount of $850 (that is, $1,000 + $200 - $350). If the percentage set in Deduction Maintenance (or Employer Contribution/Super Maintenance) is 9.5%, then the deduction (or contribution) will be 9.5% of $850, which equals $80.75.
In Income Type Maintenance and Allowance Maintenance, select the Include in OTE check box to include the pay element as income for the calculation of OTE
In Deduction Maintenance, set the Part of OTE check box to Yes if the deduction is to reduce the employee's income for the calculation of OTE
REF: A000795, SF 4101
Setting up employer SG contributions based on Ordinary Time Earnings (OTE)
Step 1: Setting up an employer Super Guarantee contribution based on Ordinary Time Earnings (OTE)
To set up an employer SG contribution based on Ordinary Time Earnings choose Setups | Payroll | Employer Contributions | Maintain.
- For Super Guarantee contributions ensure that you set up the contribution to calculate as % of OTE (Ordinary Time Earnings).
- For all superannuation contribution types, ensure that you select the Use Employee Other Accounts check box.
See Field Descriptions below for information on how to complete the fields when setting up a Super Guarantee contribution.
Setting up employer SG contributions based on Ordinary Time Earnings
Employer Contribution / Super Maintenance fields
| Field | Description |
|---|---|
| Contribution Code | Type a meaningful identifier for this contribution in the Contribution Code field, for example SG. |
| Description | Type a meaningful description for this contribution in the Description field, for example Super Guarantee. |
| Type | Select G = % of OTE (Ordinary Time Earnings). |
| Contribution Category | Select S = Superannuation (Award). |
| Percent | Type the percentage to be contributed by the employer and select whether this percentage is fixed or variable. As the SG contribution percentage is determined by legislation and should not be changed, and to allow future legislative changes to flow through to standard pays, a Fixed percentance is recommended. |
| Contribution Type Code | Select SG Superannuation Guarantee Contributions. For a description of contribution types, see Superannuation contribution types. |
| Quarterly Value Maximum | (Optional) Enter the quarterly threshold set by the ATO. If an employee's earnings are below this threshold, an employer is not required to pay Super Guarantee contributions. |
| Monthly Threshold | (Optional) Enter the monthly threshold set by the ATO. If an employee’s earnings are below this threshold, an employer is not required to pay Super Guarantee contributions. Note: The Quarterly Threshold and Monthly Threshold are set by the ATO. For more information visit the ATO website at www.ato.gov.au. |
| Show Rate on Pay Advice | (Optional) If you want to show the contribution rate or quantity on employees’ pay advices, select the Show Rate on Pay Advice check box |
| Show YTD on Pay Advice | (Optional) If you want to show the year-to-date amounts on the employees’ pay advices, select the Show YTD on Pay Advicecheck box. |
| Allow date entry | (Optional) If you want to display an additional field in transaction entry to show the actual day the employee received the contribution, select Allow date entry. If no date is entered, the pay period ending date is used. |
| Use Employee Other Accounts | Select Use Employee Other Accounts for all superannuation contribution types. This ensures that a valid Employee Other Account is selected when a contribution or deduction (salary sacrifice) line is entered on a time sheet. If a valid account is not selected in the Employee Account Code field, the message Employee Other Account must be entered is displayed. To continue, a valid Employee Other Account must be selected. If an account does not exist then it must be created in Employee Super/Other Accounts before continuing. |
| Multiple G/L Dissections | If the Multiple G/L Dissections option is available, select this check box to enable posting to multiple general ledger accounts. The option is only available when theCosting and General Ledger options are set to Yes in Payroll Options (Setups | Payroll | Options | Payroll Options). |
| Show on Pay Advice | To display the contribution on employees’ pay advices, select the Show on Pay Advicecheck box. |
| Disperse by Cost Centre | (Optional) The Disperse by Cost Centre check box allows you to disperse the superannuation payment across the various cost centres contributing to the pay. To set this up see Setting up superannuation dispersal by cost centre. |
Complete the GL Posting Details only if you are posting to the general ledger.
| Field | Description |
|---|---|
| Expense Account | Select or enter the codes of the general ledger Expense Account and Liability Account used and select whether or not to consolidate them. Attaché Software recommends that you set Consolidate to No for both accounts until you are sure the allocations are correct by checking the postings after each pay run. |
| Liability Account |
Multiple GL Posting Details is only available when the Costing and General Ledger options have been selected on the Options tab in Setups | Payroll | Options | Payroll Options.
| Field | Description |
|---|---|
Expense Account | If you are using multiple general ledger postings (that is, you selected the Multiple G/L Dissections check box), in Multiple General Ledger Postings you can select or enter all relevant cost centres and expense and liability accounts. Attaché Software recommends that you set Consolidate to No for both accounts until you are sure the allocations are correct by checking the postings after each pay run. |
| Liability Account |
Step 2: Establishing which income types, allowances and deductions to include in OTE
After you have set up the contribution type you need to establish which income types and allowances are included in the employee’s income and which deductions reduce the employee’s income for the calculation of the SG contribution.
For further information see: Ensuring correct Ordinary Time Earnings (OTE) pay elements
Modifying an employee standard pay
You may need to modify your standard pays if you have made changes to your payroll setups. For example, if you’ve added a new employer Super Guarantee contribution, you’ll need to update your standard pays to use the new contribution code.
To modify an employee standard pay:
- Choose Masterfiles | Payroll | Employee Standard Pays | Maintain.
Enter the employee code or choose Find (F2) to search for an employee.
The employee's name and pay frequency are displayed.
Tip: Choose Search (F3) to switch between sorting by employee code or surname.- In the Function field, choose M=Modify pay.
- Choose Accept (F9).
- Modify the relevant details.
- Choose Accept (F9).
- Choose Finish (Esc).
- To the Save standard employee pay? prompt, choose Yes.
The new details are saved.
To check how changes to employee details affect Attaché Payroll, see How changes to employee details or payroll setups take effect
Reconciling your Super Guarantee calculations
If you've made changes in Employer Super/Contribution Maintenance or you've updated your pay elements, prior to processing your next pay run you should reconcile the Payroll | Reports | History | Pay Details report to your Payroll | Process Payroll | Pre-Process Reports| Pay Details report to ensure the Superannuation Guarantee is calculating correctly for each employee, based on their ordinary-time earnings.
To produce the Pay Details History report:
- Choose Payroll | Reports | History | Pay Details.
- On the Options tab:
- Select the required Pay Frequencies
- Set the Date Range check box to Yes
- In the First Date and Last Date fields enter the last processed pays' Date Paid date
- Select the Date Paid option
- Select the Report Options as shown below
- In Itemise Totals, set the Contributions check box to Yes.
Now use the details from this report to reconcile with the Payroll | Process Payroll | Pre-Process Reports| Pay Details report.
The Pay Details History report shows the details for each processed pay for each employee, including the SG contribution
If you find any discrepancies in the super calculations when reconciling the two reports, this may be due to:
- Incorrect pay elements: the Include in OTE or Part of OTE check box has not been selected. In this case, identify and update the pay elements (as per the instructions above), then uncheck and re-check the pays. Re-run the Payroll | Process Payroll | Pre-Process Reports| Pay Details report and reconcile against the Pay Details History report to confirm that the super calculations are correct.
- Your previous superannuation setup was not calculating SG contributions based on the correct pay elements. In this situation, you may wish to calculate the outstanding SG amount and process an adjustment pay.
REF 071218