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What are qualifying earnings?
Qualifying earnings (QE) are the types of payments made to employees that are used to calculate their super guarantee (SG) under Payday Super.
QE includes:
- ordinary time earnings (OTE), i.e. payments for ordinary hours of work including certain types of paid leave, allowances, bonuses and lump sum payments. Find out what payments are considered OTE
- all commissions paid to an employee
- salary sacrifice amounts that would qualify as QE had they not been sacrificed to superannuation
- earnings paid to workers who fall under the expanded definition of employee, including payments to independent contractors paid mainly for their labour.
What does QE mean for employers
From 1 July 2026 all employers will use qualifying earnings (QE) as the base to calculate both the SG amount and the super guarantee charge (SGC). Currently employers calculate SG and SGC on different earnings bases.
For many employers, the new concept of QE doesn’t change the amount of SG you are currently paying for your employees.
Most employees are eligible for SG. Independent contractors paid mainly for their labour are considered employees for SG purposes.
How to calculate, pay and report SG
Before 1 July 2026
- Calculate SG as 12% of eligible employees' OTE
- Pay super at least once a quarter
- Report OTE or super liability (or both) in Single Touch Payroll (STP)
From 1 July 2026
- Calculate SG as 12% of eligible employees' QE
- Pay super at the same time as QE (on pay day)
- Report both QE and super liability in STP
When to start reporting QE in STP
From 1 July 2026, employers will be required to report the year-to-date amount of QE for each employee through their STP reporting each payday.
Employers will also have to report the year-to-date super liability for that employee.
Reporting payments made to independent contractors
It isn’t mandatory to report payments made to independent contractors paid mainly for their labour in STP. You’ll need to confirm their eligibility for super.
If you do choose to report for these workers, you'll need to report both QE and super liability.
Changes to reporting in STP
Before 1 July 2026
Employers need to report one or both of OTE and super liability for each eligible employee.
From 1 July 2026
It is mandatory to report each eligible employee’s QE and super liability.
STP reports that don’t include both amounts by 1 July 2027 will be rejected.
Why both QE and super liability are reported
QE replaces OTE as the base for calculating an employer’s SG payments.
An employer may have additional obligations to pay super under an industrial instrument, such as an award or agreement. These amounts may not be QE but can continue to be reported as super liability in STP.
Examples
Example 1: allowance that is not OTE or QE
EmployerA Pty Ltd pays under an award that requires employees to be paid 38 ordinary hours and $22.96 tool allowance per week. The award requires their super to only be paid on ordinary hour payments (not allowances).
The tool allowance is an expense allowance paid with the reasonable expectation that the amount will be fully expended by the employee in the course of providing their services.
The tool allowance is not ordinary time earnings (OTE) or qualifying earnings (QE).
In STP, EmployerA Pty Ltd:
- reports the total amount paid for the 38 ordinary hours per week as QE
- does not report the tool allowance as QE
- includes the total amount of super payable on the 38 ordinary hours at Superannuation Liability.
Example 2: superannuation on paid parental leave under an industrial instrument
EmployerB Pty Ltd has an enterprise agreement in which employees are entitled to 12 weeks paid parental leave paid by the employer. Their enterprise agreement also stipulates that superannuation is to be paid on all paid leave.
Paid parental leave is not ordinary time earnings (OTE) or qualifying earnings (QE).
EmployerB Pty Ltd still calculates and pays super on the paid parental leave amounts because they have the additional industrial obligation to do so.
In STP, EmployerB Pty Ltd:
- does not report the paid parental leave amount as qualifying earnings
- includes the total superannuation amount payable on the paid parental leave at Superannuation Liability.
Example 3: superannuation on overtime under an industrial instrument
EmployerC Pty Ltd pays under an agreement that has a clause requiring superannuation to be paid on all remuneration, including overtime.
Overtime is not ordinary time earnings (OTE) or qualifying earnings (QE).
EmployerC Pty Ltd still calculates and pays super on the overtime amounts because they have the additional industrial obligation to do so.
In STP, EmployerC Pty Ltd:
- does not report the overtime amounts as qualifying earnings
- includes the total superannuation amount payable on QE and overtime at Superannuation Liability.
Working out OTE and QE
Below is an example of the most common types of OTE and QE payments. You can see more details and information at What payments are qualifying earnings.
|
Payment |
Salary and wages |
OTE |
QE (from 1 July 2026) |
|---|---|---|---|
|
Hours and loading |
|||
|
Yes |
Yes |
Yes |
|
|
Casual loading |
Yes |
Yes |
Yes |
|
Shift penaltiesExternal Link (including public holiday penalties) |
Yes |
Yes |
Yes |
|
OvertimeExternal Link payments |
Yes |
No |
No |
|
Leave types |
|||
|
Annual leave |
Yes |
Yes |
Yes |
|
Rostered days off – time taken and paid at ordinary rates |
Yes |
Yes |
Yes |
|
Yes |
Yes |
Yes |
|
|
Salary sacrifice |
|||
|
Salary sacrificed to superannuation – amount that would otherwise be OTE if paid to the employee |
Yes |
Yes |
Yes |
|
Salary sacrificed to superannuation – amount that would not otherwise be OTE if paid to the employee (such as paid parental leave or overtime) |
Yes |
No |
No |
|
Commission |
|||
|
Yes |
Yes |
Yes |
|
|
Commission solely for work performed entirely outside ordinary hours |
Yes |
No |
Yes |
How to get ready to report QE
Your digital service provider will let you know when your software is ready to report QE. You can check with them to find out when their STP product will be updated.
Review your STP reporting. Make sure you’re lodging on time, your pay codes and employee details are correct, and your contact details are up to date.
Visit Payday Super for details about QE and how to be ready.