Superannuation - ordinary time earnings

Are the listed payments provided to relevant employees considered Ordinary Time Earnings ('OTE') in subsection 6(1) of the Superannuation Guarantee Administration Act 1992 ('SGAA')? •                     Domestic and International Repatriation Allowance •                     Domestic and International Relocation Allowance •                     Housing Allowance •                     Recognition Bonus Payment •                     Referral Incentive

•                     Domestic and International Repatriation Allowance - is not OTE. •                     Domestic and International Relocation Allowance - is not OTE. •                     Housing Allowance - is not OTE. •                     Recognition Bonus Payment - These payments are considered OTE. •                     Referral Incentive - These payments are considered OTE. The above first three allowances do not fall under the definition of OTE as per subsection 6(1) of the SGAA. The last two payments are considered to be OTE as defined in subsection 6(1) of the SGAA. This advice applies for the following periods: Year Ending 30 June 2022 Year Ending 30 June 2023 Year Ending 30 June 2024 Year Ending 30 June 2025 Year Ending 30 June 2026 The arrangement commences on: 1 July 2021

Your advice is based on the facts stated in the description of the allowances and payments as set out below. If your circumstances are different from those provided, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice. •                     Entity 1 and Entity 2 are wholly-owned subsidiaries of Entity 3. •                     Both Entity 1 and Entity 2 provide their employees with a number of allowances and benefit payments to facilitate employment mobility, as well as to reward and recognise the performance of employees who undertake additional hours in their employment duties. •                     Both Entity 1 and Entity 2 may require their employees to transfer, temporarily or permanently, to another location either within Australia, or overseas. •                     For such employees, either a repatriation or relocation allowance is provided at the conclusion of the particular assignment, depending on whether or not a subsequent assignment is required.

•                     Where the particular employee either returns to their home location, or to another location of their choosing at the conclusion of an assignment, the payment is termed a 'repatriation allowance'. •                     If, immediately after the conclusion of their existing assignment, the employee commences a new assignment by way of being moved to a new location, the payment is termed a 'relocation allowance'. Repatriation Allowance •                     This allowance is paid, as a one-off payment, after the employee returns to Australia. •                     The purpose of the payment is to cover the expenses (other than flights and accommodation) incurred as a result of relocation after the end of their assignment, even where they do not return to their original home location. •                     As such, where an employee does not return back to Australia after an international assignment due to unforeseen circumstances (eg. redundancy while on assignment) and instead relocates domestically or internationally, the employee will still receive a repatriation allowance.

•                     The payment is not calculated with reference to services provided, or to hours worked, and is intended solely to compensate for expenses incurred as a result of having to change location for work purposes. Relocation Allowance •                     A one-off relocation allowance is paid where an employee is required to temporarily relocate for an assignment, and rather than returning home, then commences another assignment. •                     While the payment is made after the employee arrives in the new location, it is in respect of the assignment already completed. •                     This payment is in addition to other relocation benefits, such as for the cost of travel or the shipping of personal goods. •                     Similarly to the repatriation allowance, the relocation allowance is not calculated with reference to services provided, or hours worked. It is solely in relation to expenses incurred in having to relocate for work. Housing Allowance

•                     On occasion, employees of Entity 1 and Entity 2 may be required to relocate permanently, either from overseas (where they have been employed by another subsidiary of Entity 3), to Australia, or from one Australian location to another. •                     Employees in this situation are entitled to a housing allowance, which assists with any accommodation expenses incurred as a result of the relocation. •                     This payment is provided for in the employment contract and is payable after the relocation takes place. The payment may be made either as a lump sum, or in monthly instalments, which differ only in the payment frequency, and neither of which are linked to hours worked. Lump Sum •                     The lump sum payment is a fixed amount, and is intended to cover estimated housing costs for the agreed period. •                     The payment is usually equivalent to either 6 or 12 months of base salary, and the quantum is dependent on such factors as managerial level or grade, family size, purpose of the relocation, and the location itself. Monthly Instalment

•                     As with the lump sum payment, the amount of monthly instalment housing allowance payment is determined by the employee's level or grade, family size, the purpose of the relocation, and the location itself. •                     The payment is also based on the likely rental expenses to be incurred over the period, and is expected to cover this amount. Recognition Payment •                     Both Entity 1 and Entity 2 have established a recognition scheme for employees, which rewards exceptional activities, behaviour and results of employees by way of recognition payments. •                     Under this scheme, employees may receive payment through a mixture of cash and non-monetary awards (employee's choice), when their activities and results are over and above the expectations of their role. •                     There are five different award levels, though a view is sought only in regard to cash payments under levels 4 and 5.

•                     In order to be eligible for such a payment, which is either a month or half-month's base salary, an employee must be initially nominated by a Head of Function, and then have this nomination approved following a review process. Referral Incentive •                     Entity 3 provides referral incentives to employees who successfully refer an applicant for a permanent or fixed term contract (provided the contract is 12 months or greater) and the applicant successfully completes their probation period. •                     The referring employee must complete a referral form that is signed by Human Resources and the Hiring Manager. Once (and only when) the applicant passes probation, the referring employee is entitled to the referral incentive paid by way of a cash allowance. The referral incentive will be paid to the referring employee on the successful passing of probation by the new employee. •                     Even where the referring employee is underperforming, they could still be eligible for this payment.

Superannuation Guarantee (Administration) Act 1992 subsection 6(1) Superannuation Guarantee (Administration) Act 1992 section 11 Detailed reasoning Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' explains the meaning of OTE. OTE in relation to an employee is defined in subsection 6(1) of the SGAA as: (a) the total of: (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment: (A)         a payment in lieu of unused sick leave; (B)         an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997 ;