In this topic
- Introduction
- Qualifying Earnings (QE) Explained
- What is Qualifying Earnings?
- Why Is This Changing?
- What Counts as Qualifying Earnings?
- How Salary Sacrifice Affects QE
- How ePayroll Handles QE
- QE vs Super Liability (L)
- Where to Configure QE in ePayroll
- Key Things to Remember
Introduction
This topic explains what Qualifying Earnings (QE) is, why it is changing from 1 July 2026, and how ePayroll calculates and reports it.
Disclaimer: This documentation explains how ePayroll handles Qualifying Earnings configuration for Pay Day Super. For regulatory advice on your specific obligations under Australian superannuation law, consult the Australian Taxation Office (ATO), your accountant, or a payroll professional.
Qualifying Earnings (QE) Explained
Qualifying Earnings is the term used to describe the earnings on which superannuation guarantee contributions are calculated from 1 July 2026. It replaces the previous concept of “Ordinary Time Earnings” (OTE).
This page explains what QE is, why it matters, and how it works in ePayroll.
What is Qualifying Earnings?
Qualifying Earnings is the portion of an employee’s earnings that counts toward the Superannuation Guarantee (SG) calculation. From 1 July 2026, the ATO requires employers to:
- Identify which earnings are “qualifying” for SG purposes
- Report those earnings in every STP submission
- Calculate and report the Super Liability (L) based on Ordinary Time Earnings (OTE)
ePayroll calculates QE automatically based on your paycode mappings in the STP2 Config screen.
Why Is This Changing?
Under Pay Day Super reforms, the ATO needs richer data in STP submissions to verify that employers are paying the correct amount of super on time. Qualifying Earnings is the mechanism used to capture this — it makes the super calculation transparent and auditable at the payroll level.
What Counts as Qualifying Earnings?
The ATO determines which types of earnings are qualifying. As a general guide:
| Earnings Type | Typically Qualifying? |
|---|---|
| Regular salary and wages | Yes |
| Paid leave (annual, personal, long service) | Yes |
| Overtime | No (generally) |
| Allowances (role/function-based) | Depends — review per ATO guidance |
| Bonuses and commissions | Depends — review per ATO guidance |
| Salary packaging deductions | Depends — review per ATO guidance |
NOTE: ePayroll pre-populates QE mappings for all your paycodes based on your Ordinary Time Earnings (OTE) configuration. You are responsible for reviewing and confirming these mappings are correct for your organisation.
NOTE: Under-18 employees: Employees under 18 are only subject to super (and QE) when they work more than 30 hours per week. ePayroll handles this automatically for weekly payrolls.
How Salary Sacrifice Affects QE
Salary sacrifice arrangements can affect your QE calculation depending on the type:
| Salary Sacrifice Type | Impact on QE |
|---|---|
| Type S (Salary sacrifice to super) | No impact on QE |
| Type O (Salary sacrifice for other benefits, e.g., novated lease, pre-tax benefits) | Reduces QE |
| Post-tax deductions | No impact on QE |
Example: If gross earnings are $5,000 and you have a $1,000 Type O salary sacrifice deduction (e.g., novated lease), the QE reported will be $4,000.
QE = Gross QE paycodes − Type O deduction amounts
How ePayroll Handles QE
Here is how QE works end-to-end in ePayroll:
- Paycode Mapping — Each paycode in your system is mapped to either QE = Yes or QE = No in the STP2 Config screen. ePayroll pre-fills these based on your Ordinary Time Earnings (OTE) configuration.
- You Review and Confirm — Before 15 June 2026, you review the pre-filled mappings and confirm they are correct for your organisation.
- QE Calculated Each Pay Run — When you process a payroll, ePayroll calculates the QE total for each employee based on which paycodes are flagged as qualifying, minus any Type O salary sacrifice deductions.
- Super Liability (L) Calculated — ePayroll then calculates the Super Liability (L) using Ordinary Time Earnings (OTE) × SG rate, capped at the Maximum Contributions Base.
- Reported in STP — The QE and L values are included in the STP2 submission sent to the ATO for every pay event from 1 July 2026.
QE vs Super Liability (L)
| Term | What it means | How it’s calculated |
|---|---|---|
| Qualifying Earnings (QE) | The total earnings this pay period that count toward the SG calculation for reporting purposes | Based on your confirmed QE paycode mappings, minus Type O salary sacrifice deductions |
| Super Liability (L) | The calculated super amount owed | OTE × SG rate (capped at MCB) |
NOTE: Important: QE and Super Liability (L) can have different amounts because L is calculated using Ordinary Time Earnings (OTE), not QE. Both QE and L values are reported to the ATO in every STP submission from 1 July 2026.
Where to Configure QE in ePayroll
QE mappings are managed in the STP2 Config screen:
Navigation: Employer → STP2 Config (left menu)
For a full walkthrough of how to review, update, and confirm your mappings, see Configuring Qualifying Earnings: Step-by-Step.
Key Things to Remember
- QE replaces OTE as the basis for SG reporting from 1 July 2026
- Super Liability (L) continues to be calculated using OTE × SG rate
- Type O salary sacrifice deductions reduce QE; Type S has no impact
- ePayroll pre-populates your QE mappings — but you must review and confirm them before 15 June 2026
- QE and Super Liability (L) are automatically reported in every STP submission from 1 July 2026
- You can update your mappings at any time after confirming
