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ARTICLE · 11 APRIL 2019

ATO clarifies its position for employers on superannuation and annual leave loading

Cooper Grace Ward
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Annual leave loading is classified as ordinary time earnings, unless the employer provides alternative written evidence.

AustraliaEmployment and HR
Belinda Winter
Belinda Winter
Fletch Heinemann
Fletch Heinemann
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Until recently, whether compulsory superannuation had to be paid in respect of annual leave loading was a confused issue. The ATO has now provided clarification in a recent announcement.

Annual leave loading

Annual leave loading is an entitlement contained within most modern awards and covers employees in industries such as building and construction, manufacturing, mining, horticultural, agricultural, hospitality, retail, administration, banking, finance, and insurance.

Annual leave loading is an additional payment of 17.5% (generally) provided to an employee on top of their base rate of pay during periods of annual leave. Annual leave loading was initially incorporated into modern awards to compensate employees who usually receive overtime and penalty rates during work periods for the shortfall in wages during periods of annual leave.

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