In a recent announcement the ATO addressed whether superannuation should be paid on annual leave loading. Historically there has been confusion as to whether superannuation should be paid on annual leave loading as it was argued annual leave loading did not form part of ordinary hours.

However the new Superannuation Guarantee Ruling SGR 2009/2 states, annual leave loading will be ordinary time earnings (OTE) unless it is referable to a lost opportunity to work overtime.

As most awards do not specifically state the reason the annual leave loading entitlement is provided is to compensate for a lost opportunity of overtime under this ruling annual leave loading entitlement is considered part of OTE and therefore superannuation is paid on the loading. 

Only in situations where the Award directly references that the annual leave loading entitlement is to compensate for lost overtime, would superannuation not be paid on the annual leave loading.  This is because the annual leave loading would not be considered as OTE.

ProcessWorx based in Perth, Western Australia, is personally dedicated to helping small business with HR support, HR advice and farm safety. If you require HR support, HR advice, farm safety please contact ProcessWorx on (08) 9316 9896 or email


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