Superannuation on annual leave.

Nearly every Australian page answering "is super payable on annual leave" cites Superannuation Guarantee Ruling SGR 2009/2. That ruling no longer exists. It was withdrawn with effect from 1 July 2026, the same day ordinary time earnings stopped being the base the super guarantee is calculated on, and the ruling written to replace it is still only a draft. The three answers below come from the Act itself and from the ATO guidance published since, and they are given with the caveat that the leading ruling on this topic is currently under review.

What changed on 1 July 2026

Two things moved at once, and together they make most published guidance on this topic stale. The first is that the earnings base changed. The super guarantee is now calculated on qualifying earnings, a concept introduced into the Superannuation Guarantee (Administration) Act 1992 by the Treasury Laws Amendment (Payday Superannuation) Act 2025. Ordinary time earnings still exists and is the largest component of qualifying earnings under section 10A(1)(a), but it is no longer the test standing on its own.

The second is that the ruling everyone cites was withdrawn. The Commissioner of Taxation signed the withdrawal notice on 30 June 2026.

Its replacement, draft Law Companion Ruling LCR 2026/D1 Payday Super: qualifying earnings, is not final. Its own front matter says finalisation "is pending the outcome of the appeal process from the Federal Court's decision in Department of Education v Commissioner of Taxation [2026] FCA 898", and that when the final Ruling issues it is proposed to apply to payments of qualifying earnings made on or after 1 July 2026. Everything quoted from LCR 2026/D1 below is therefore the Commissioner's stated view in a draft, not settled law.

The practical effect is smaller than the drafting change suggests. The ATO's own summary is that for most employers the new concept does not change the amount paid: the rate is still 12%, and every payment that was included up to 30 June 2026 continues to be included. Across the ATO's qualifying earnings tables there is exactly one row where the two columns now disagree, and it has nothing to do with leave: a commission solely for work performed entirely outside ordinary hours is not OTE but is qualifying earnings.

One consequence matters when you are checking your own payslip. The ATO's long-standing "List of payments that are ordinary time earnings" page now carries a banner reading that the information is only for employee earnings paid up to 30 June 2026, and it has been moved under a quarterly-super archive path. If a payroll guide is still citing that page as current, it is citing the wrong document.

Annual leave you take: super is payable

This is the easy one, and the answer has not changed. Annual leave is listed as both ordinary time earnings and qualifying earnings in the ATO's paid leave table. The statutory route is section 6(1) of the SGAA, which defines ordinary time earnings to include "earnings in respect of ordinary hours of work", and section 10A(1)(a), which folds ordinary time earnings into qualifying earnings.

The draft ruling explains why leave pay counts even though no work is done during it, and the reasoning is worth having because it is the same reasoning that decides the loading question below.

The same logic covers personal and carer's leave, long service leave taken in the ordinary way, and paid public holidays. Work out the leave itself with the annual leave calculator.

Leave loading: it depends why it is paid

Annual leave loading is where the real disagreement sits, and the ATO's position turns entirely on the purpose of the loading rather than on its size or its label. The default is that loading is included. The exception is narrow.

Note where the burden sits. The employer has to be able to show it, and the ATO specifies what will do:

Where there is no written evidence, the ATO says the employer must either obtain it as soon as possible or start including the loading in qualifying earnings. The legal formulation behind that sits in the draft ruling, and the two words that do the work are "wholly" and "solely".

The general test it points back to, at paragraph 32, is that all earnings are in respect of ordinary hours unless they are "solely in respect of non-ordinary hours of work", and paragraph 33 adds that all that is required for inclusion is "some discernible and rational link" between the earnings and service during ordinary hours, with no requirement that the link be exclusive.

In practice this means the standard 17.5% loading in a day-worker award usually does attract super, because the award simply does not say the loading is about overtime. The ATO's own worked example draws the line between two groups inside one award: for day workers, the award provides leave loading and paid overtime but "doesn't clearly link overtime and annual leave loading"; for shift workers, the award indicates the loading compensates for lost shift allowances. The employer self-assesses super as payable for the day workers and not for the shift workers.

For what loading is and which awards provide it, see what annual leave loading is and how to calculate it, or put a figure on your own with the leave loading calculator.

Unused leave paid out on termination: no super

This is the answer people get wrong most often, usually by reasoning that the payout represents leave and leave attracts super. It does not, and the reason is not a ruling or an ATO policy. It is written into the definition itself.

Because the exclusion is in the definition of ordinary time earnings, and qualifying earnings picks up ordinary time earnings as it is defined, the payout falls outside both. The ATO's termination table says the same thing in plainer words, and closes off the "it depends why I left" escape hatch: unused leave on termination, including annual leave, annual leave loading and long service leave, is neither ordinary time earnings nor qualifying earnings, and that "applies regardless of the reason for termination or treatment for tax purposes".

The draft ruling's own example puts the contrast in one place. Darren is dismissed, paid two weeks in lieu of notice, and paid out one week of unused annual leave.

So the same final payslip can carry both answers. Payment in lieu of notice is qualifying earnings for every termination reason. The ATO's worked example runs it: on a $40,000 redundancy made up of $10,000 in lieu of notice, $25,000 redundancy pay and a $5,000 ex gratia payment, only the $10,000 is qualifying earnings, and the super on it is $10,000 x 12% = $1,200. Redundancy pay itself is not qualifying earnings, because on the draft ruling's reasoning at paragraph 90 it compensates for the loss of a job rather than rewarding service.

To price the payout side of this, use the annual leave payout calculator or the whole final pay calculator. For withholding on the same amounts, see annual leave payout tax.

Cashing out while still employed: super is payable

Here is the trap sitting right next to the last section. The same money, paid for the same untaken leave, is treated differently purely because the employment continues. Cashed out annual leave and leave loading in service are both ordinary time earnings and qualifying earnings.

The draft ruling explains the mechanism using long service leave, and the same logic runs through annual leave: the termination exclusion in section 6(1) is written as a carve-out for a lump sum paid on the termination of employment, so a payment made while the employee remains employed never engages it. Paragraph 67 puts it as the payment being "paid in connection with the employee's ordinary hours in the same way as any other long service leave payment".

The rules on when you can cash out at all are separate and stricter, and they are set out in cashing out annual leave.

Quick reference: leave payments and super

Every row below is the FY2026-27 treatment from the ATO's qualifying earnings tables. Ordinary time earnings and qualifying earnings answer the same for all of them.

Casual loading appearing in that list as super-bearing is worth pausing on, because it is the one entitlement casuals get instead of paid leave. The draft ruling at paragraph 63 reasons that casuals are usually not entitled to paid leave or paid public holidays and instead receive a higher rate referable to their ordinary hours, so the loading is ordinary time earnings unless it is paid for overtime hours. In dollars that means the 12% is calculated on the loaded rate, not the base rate. The casual loading calculator shows both figures side by side.

The rate, and the maximum contribution base

The general super guarantee rate for FY2026-27 is 12.00%. That is now the terminal rate rather than a step in a schedule: the increases that ran from 9% in 2002 to 12% in 2025 have finished. The statutory source is section 17A(2) of the SGAA, which defines "charge percentage" as 12, applied to the amount of the qualifying earnings paid on a given day. Norfolk Island runs a separate transitional rate, 11% for 1 July 2026 to 30 June 2027, reaching 12% on 1 July 2027.

The maximum contribution base also changed shape on 1 July 2026, from a quarterly amount to an annual one. For 2026-27 it is $270,830. Earnings above that in the income year do not attract compulsory super. The ATO derives it by dividing the concessional contributions cap by the charge percentage and multiplying by 100, then rounding down to the nearest ten dollars.

For context on the old structure, the quarterly base was $62,500 in 2025-26 and $65,070 in 2024-25, each capping super at $7,500.00 and $7,483.05 a quarter respectively.

Payday Super and the 7 business days

The other half of the 1 July 2026 change is timing. Quarterly super is gone. Contributions are now tied to each payment of qualifying earnings, which the Act calls the QE day and which for most employers is simply payday.

Two details in that are easy to miss. The first is that the deadline is about receipt by the fund, not about when the employer sends the money. The ATO puts it as the contribution being on time if it is received by the fund, with the information needed to allocate it to the member account, within 7 business days after the employee is paid. Where a clearing house sits in the middle, that processing time comes out of the same seven days.

The second is that the business day definition is national. A public holiday covering the whole of any state or territory is not a business day for Payday Super purposes even for an employer in a different state. A holiday covering only part of a state, such as Royal Hobart Show Day, remains a business day.

Four situations extend the deadline:

• The first contribution for a new employee, or to a new fund, gets 20 business days.
• Out-of-cycle payments such as bonuses, commissions, allowances, back payments and payments in advance are due within 7 business days after the next in-cycle payday, under legislative instrument LI 2026/20.
• Exceptional circumstances, such as natural disasters or widespread IT and communications outages, can be covered by an ATO determination giving the later of 20 business days after the QE day or 20 business days after the determination.
• Where a later due date applies to one QE day, a following QE day whose due date would fall earlier is pushed out to match it.

The link to annual leave is direct rather than incidental. If you are paid in advance for a block of leave, that payment is a payment of qualifying earnings on the day it is made, so the super on it runs from that day rather than waiting for the pay period the leave covers. That is the reading of section 6(1) with section 17A(1) rather than a statement the ATO makes in those words, so treat it as the implication of the rule and confirm it against your own payroll timing.

Finally, super is now an employment-law obligation as well as a tax one. Section 116B of the Fair Work Act 2009 requires an employer to make contributions so as to avoid liability for the superannuation guarantee charge, which makes unpaid super an issue the Fair Work Ombudsman can act on. Superannuation is the eleventh entitlement in the National Employment Standards.

Common questions

Is super paid on annual leave?

Yes, on annual leave you take. The ATO lists annual leave as both ordinary time earnings and qualifying earnings, and the draft ruling treats leave pay as a continuation of ordinary pay for ordinary hours. The super guarantee is 12% of that leave pay.

Is super paid on annual leave loading?

Usually yes. Loading is included in qualifying earnings by default, and is only excluded where the employer can show, with the award, the agreement or a documented policy, that the loading compensates for a lost opportunity to work overtime. Most day-worker awards do not say that, so the loading attracts super.

Is super paid on an annual leave payout when I resign?

No. A lump sum for unused annual leave paid on termination is excluded by name from the definition of ordinary time earnings in section 6(1) of the SGAA, and the ATO applies that regardless of the reason for termination or how the payment is taxed. Payment in lieu of notice, sitting on the same final payslip, does attract super.

Why does cashing out leave attract super when a termination payout does not?

Because the statutory exclusion is written narrowly. It only catches a lump sum paid on the termination of employment. A cash-out made while you are still employed never engages it, so the payment is treated like any other leave payment.

Has the 12% rate changed?

No. The rate is 12% and the increases have finished. What changed on 1 July 2026 is the base it is applied to, which is now qualifying earnings, and the timing, which is now within 7 business days of each payday rather than quarterly.

Can I rely on SGR 2009/2?

No. It was withdrawn with effect from 1 July 2026. The Commissioner's current view is in draft ruling LCR 2026/D1, whose finalisation is pending the appeal from Department of Education v Commissioner of Taxation [2026] FCA 898. Because it is a draft, the position on any borderline payment could still move.

Author & reviewer

Sarah Reid, CAHRI

Certified Australian HR Practitioner · Cert IV Payroll · 12 years Fair Work compliance

Sarah has spent over a decade advising Australian SMBs on Fair Work, NES compliance, and payroll. Based in Sydney, she has worked across hospitality, retail and professional services.

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