ATO Interpretative Decision
ATO ID 2001/14 (Withdrawn)
Superannuation guarantee scheme: Long Service Leave Entitlements
FOI status: may be released
Status of this decision: Decision Withdrawn 5 February 2010
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Whether the employer is required to include long service leave entitlements (paid as a lump sum in lieu of leave) in the earnings base for the purposes of the Superannuation Guarantee (Administration) Act 1992 ('SGAA') when there is no termination of employment.
The employer is required to include long service leave entitlements (paid as a lump sum in lieu of leave) in the earnings base for purposes of the Superannuation Guarantee (Administration) Act 1992 ('SGAA') when there is no termination of employment.
An employee was paid accrued long service leave as a lump sum while they remained an employee of the same employer. The employer sought clarification on whether the paid out leave should be included in the ordinary time earnings (OTE) for purposes of the SGAA.
Reasons For Decision
Section 6(1) (SGAA) defines OTE to include earnings 'in respect of ordinary hours of work'. Superannuation Guarantee Ruling SGR 94/4 discusses what constitutes OTE and what 'in respect of ordinary hours of work' means. LSL paid in a lump sum on termination is specifically excluded from OTE by the definition in section 6(1) (SGAA). The Ruling specifies that 'in respect of' means to have some connection with, which means that an amount will be included in OTE if is paid to satisfy an entitlement that accrued as a result of attending, or working, in those hours.
LSL is determined on the basis of attending or working the relevant ordinary hours and therefore, on this basis, the payment of LSL to an employee in lieu of taking the leave is included in OTE.
Date of decision: 15 October 1998
Superannuation Guarantee (Administration) Act 1992
Related Public Rulings (including Determinations)
Superannuation Guarantee Ruling SGR 94/4
Superannuation Guarantee Scheme
Long service leave
Lump sum payments for unused long service leave
Siebel/TDMS reference number: UMG29534
Business line: Superannuation
Date of publication: 4 June 2001