What Are Qualifying Earnings For Superannuation?

What has changed

1. One earnings base for both SG and SGC

Previously, SG was calculated on “OTE” or Ordinary Time Earnings, whereas SGC was calculated on salary or wages (a wider definition). This created a situation where late payment penalties could be higher than expected because the SGC base was actually broader.

From 1 July 2026, both SG and SGC are calculated on Qualifying Earnings.

2. All commissions are now Qualifying Earnings

This one of the more significant technical changes.

Under the old rules, commissions paid for work performed entirely outside of ordinary hours were not OTE. No super guarantee was required on those amounts.

Under Payday Super, all commissions are qualifying earnings with no exceptions. If your employee earns commission for work done on a weekend (or at a time outside their regular hours), super guarantee will apply to these amounts.

If you have employees on commission-based arrangements, it’s a good idea to check how your payroll system is currently treating those amounts.

3. Salary sacrifice can no longer reduce your SG obligation

Under the old rules, there were circumstances where salary sacrificed to super could reduce an employee’s OTE base, therefore reducing the SG an employer was required to pay.

From 1 July 2026, if an amount would otherwise be qualifying earnings, it stays in the QE base even if the employee has sacrificed it to super.

To calculate SG, you must add the sacrificed amount back into the base first.

This means that employers can no longer reduce their SG bill by encouraging staff to salary sacrifice more, the SG payment stays the same regardless of how much of the employee’s pay is sacrificed.

4. More contractors may now be entitled to super

The expanded definition of an employee under Payday Super is broader than the previous rules. It explicitly includes:

• ALL Independent contractors paid mainly for their labour (unchanging)
• Artists and musicians working under a contract
• Sportspersons
• Statutory office holders

Paying super guarantee for contractors is not a new concept because contractors paid mainly for labour were already covered under the old rules.

However, this expanded definition aims to catch everyone in a ‘borderline’ arrangement.

5. Penalties accumulate faster

Under the quarterly system, SGC could be triggered once per quarter if you missed a payment. Under Payday Super, the trigger is each individual payrun. If you fall behind across multiple pay cycles, the charges compound quickly.

This is not a change to qualifying earnings specifically, but it is directly relevant to how seriously late payment needs to be treated under the new system.

What remains the same

The majority of what counts as ordinary time earnings carries straight over into qualifying earnings. The following rules are unchanged:

• Overtime is excluded from QE where ordinary hours are clearly identified in an award or agreement
• Employer and government paid parental leave are not qualifying earnings
• Payment in lieu of notice is qualifying earnings
• Unused leave on termination is not qualifying earnings (with the exception of payment in lieu of notice)
• The treatment of allowances, bonuses, directors’ fees, and most leave types remains the same

If your payroll was set up correctly under the old rules, most of it will be right under the new rules too. The areas to check are commissions, salary sacrifice arrangements, and any contractor relationships.

Full list: what counts as qualifying earnings (ATO, 2026)

The following is based on ATO guidance updated February 2026. This list is non-exhaustive, meaning that it doesn’t cover every possible payment type.

Below is an example of the most common types of QE payments and how they differ to previous earnings bases. You can see more details and information on the ATO website at What payments are qualifying earnings.