Qualifying Earnings

Qualifying Earnings

Checks Required

To ensure your reporting is Payday Super compliant, you will need to review the Qualifying Earnings check for each payment, deduction, and leave element. If you do not have any special elements set up in your account, there will be nothing for you to action in this area. However, if you do use special elements, there may be some items that require your review.
To complete this check, please go to Setup > Pay Elements > Check for Qualifying Earnings
If there is anything that requires your attention, a comment will appear under the Action column of the report.



What Are Qualifying Earnings?

Qualifying Earnings (QE) are the types of payments that superannuation must be calculated on under the new Payday Super legislation.

In simple terms, QE gives businesses a clear and consistent way to work out super contributions each payday. Instead of dealing with uncertainty around which payments attract super, employers now have a standard guide to follow. The purpose, to make payroll and superannuation easier to manage while helping employees receive the correct super payments on time.

You may still be required to pay superannuation on additional payments that the ATO has not classified as QE, such as payments covered by an award or workplace agreement. While these amounts would not be reported to the ATO as QE, they would still be treated as superable earnings and included under the employee’s superannuation liability. 
Please note: if the Maximum Contribution Base is enabled for your organisation, the new annual cap is calculated based on the QE amount only, not the combined total of the Super Liability and QE amounts.

The ATO have a very clear and defined list of what is included and what isn't, which can be found through the following link - what payments are qualifying earnings. 

A couple of examples of what this could look like in CloudPayroll:
If a payment is classified as Qualifying Earnings (QE), it will always be considered superable earnings.


If a payment is not classified as Qualifying Earnings (QE), but superannuation is still required under an award or agreement, the payment would not be considered QE. However, it would still be treated as superable earnings (to ensure super is calculated).


What Payments Are Included in QE?

These payments include, but are not limited to:
  1. Ordinary Time Earnings - ordinary hours worked
  2. Paid Leave - certain types of paid leave are considered QE, mainly Annual, Sick and Long Service Leave
  3. Commissions - bonus payments are generally included in QE
  4. Allowances - not all allowances are QE

What Is Not Included in QE?

These payments are generally not included:
  1. Overtime
  2. Expense Reimbursements
  3. Termination Payments - most payments made due to termination of employment.
  4. Some Leave Types - for instance paid parental leave (employer or goverment) and jury duty.


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