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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051442339401

Date of advice: 23 October 2018

Ruling

Subject: Superannuation guarantee and ordinary time earnings

Question

Is the Mobile Phone and Motor Vehicle Allowance (the Allowance) paid by an employer (Your Client) to certain employees (the Employees) ordinary time earnings (OTE) as defined in subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

Answer

No

This advice applies for the following periods:

Income year ending 30 June 2019

The arrangement commences on:

1 July 2018

Relevant facts and circumstances

Your Client employs the Employees to sell its products.

The terms of the Employees’ employment with Your Client are set out in the Contract of Employment (the Contract) which provides that:

The set rate of the Allowance has been determined in accordance with the Commercial Sales Award 2010.

The estimated work use kilometres are based on historical average annual kilometres.

The estimated work use kilometres calculation only includes kilometres travelled between the first sales appointment to another sales appointment, or to Your Client’s office. It does not include the kilometres travelled between home to the sales appointment or vice versa.

The Employees are expected to fully expend the Allowance.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 subsection 6(1)

Reasons for decision

Summary

The Allowance is not OTE of the Employees for the purposes of subsection 6(1) of the SGAA.

Detailed reasoning

Ordinary time earnings, in relation to an employee, is defined in subsection 6(1) of the SGAA as:

The Commissioner’s view on OTE, as defined in subsection 6(1) of the SGAA, is set out in Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'. Generally, an employee's 'earnings', for the purpose of the definition of OTE, is the remuneration paid to the employee as a reward for the employee's services. The practical effect for superannuation guarantee purposes is that the expression 'earnings' means 'salary or wages'.

At paragraph 27 of SGR 2009/2, the Commissioner discusses ‘Allowances and loadings’ specifically and states that certain additional payments that are described as allowances or loadings, and are paid to employees to recognise or compensate for certain conditions relating to their employment, are OTE except to the extent that they:

At paragraphs 65 and 72 of SGR 2009/2, the Commissioner states:

In this case, the Allowance is paid to the Employees with the expectation that it would be fully expended in providing services to Your Client. The Allowance is not paid to compensate the Employees for a particular condition of employment. Therefore, the Allowance is not salary or wages, and is not OTE for SGAA purposes.


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