Overview
From 1 July 2026, Payday Super legislation requires employers to report Qualifying Earnings (QE) for every employee. Definitiv handles this automatically as part of your Single Touch Payroll (STP) submission.
Qualifying Earnings are the earnings that attract Superannuation Guarantee (SG). They replace the previous concept of Ordinary Time Earnings (OTE) as the basis for super guarantee calculations and are reported to the ATO alongside your super liability in every STP lodgement.
A new Include in Qualifying Earnings checkbox has been added to pay items configuration, this has been pre-selected based on each item's OTE and superability settings. Review all pay items before your first pay run on or after 1 July 2026 to confirm each is configured correctly for your organisation.
What has changed
Previously, Definitiv submitted a super liability amount (Code L) to the ATO with each STP event. From 1 July 2026, Definitiv will also submit Qualifying Earnings (Code Q):
Code L — super guarantee liability amount (unchanged)
Code Q — the qualifying earnings amount the liability is based on
You'll also see a new Qualifying Earnings column in your pay run summary, a new Qualifying Earnings tab in employee pay run detail, and new QE columns in STP reports. Employees can review their own Qualifying Earnings in the self-service portal.
Pay item configuration
The "Include in Qualifying Earnings" checkbox
Each pay item now has an Include in Qualifying Earnings checkbox in its configuration settings. This checkbox is the authoritative flag that controls whether a pay item's amounts are counted toward an employee's Qualifying Earnings in any pay run.
To view or update the setting:
Navigate to Pay Items in your payroll configuration.
Open the pay item you want to review.
Locate the Include in Qualifying Earnings checkbox.
Check or uncheck as required and save.
Changes take effect from the next processed pay run only. Any already submitted STP pay runs will not be affected retroactively.
Automatic migration from Superable rules
When Qualifying Earnings was activated for your organisation, existing pay items were automatically migrated based on their is superable classification:
Pay items previously classified as superable - checkbox set to checked (included in QE)
Pay items not classified as superable - checkbox set to unchecked (excluded from QE)
While this migration has been performed in line with ATO guidance, all pay items should be reviewed to confirm the checkbox is set correctly for your organisation's specific arrangements. Pay items with non-standard or custom super treatment in particular - such as salary sacrifice, allowances, or leave loading - should be checked carefully.
Salary sacrifice pay items
Salary sacrifice to superannuation is treated as Qualifying Earnings under Payday Super (because the sacrificed amount would have been QE if paid directly to the employee). The Include in Qualifying Earnings checkbox is available on salary sacrifice pay items and should be set to checked for any salary sacrifice that is directed to superannuation.
Salary sacrifice to non-superannuation benefits (such as a novated lease or other packaging arrangements) is not QE and should remain unchecked. Salary sacrifice of amounts that would not otherwise be QE - such as parental leave or overtime - should also remain unchecked. This ensures that they will show as being excluded from Qualifying Earnings in the employee breakdown.
What counts as Qualifying Earnings
The Include in Qualifying Earnings checkbox on each pay item controls whether that pay item contributes to an employee's QE total. The following guidance reflects ATO rules and can be used when reviewing your pay item configuration.
For a full reference, see the ATO's What payments are qualifying earnings page.
Included in Qualifying Earnings
Ordinary time earnings (OTE) - no change from previous rules
Ordinary hours wages and salaries (including daily rates and flexi-time arrangements)
Casual loading
Shift penalties, including public holiday penalties
Piece rates for ordinary hours
Workers' compensation where the employee performs work or is required to attend work
Time for travel or training paid within the span of ordinary hours
Paid leave
Annual leave
Annual leave loading - except where clearly linked to a lost opportunity to work overtime (see note below)
Sick, personal and carers leave
Long service leave that is not paid under a portable long service leave scheme
Rostered days off (taken at ordinary rates)
Time off in lieu (TOIL) - taken and paid at ordinary rates
Family and domestic violence leave, study leave, special paid leave, gardening leave
Cashed out annual leave, long service leave, sick/personal leave, and RDOs - in service
Bonuses and commissions
All commissions - regardless of whether they were earned during ordinary hours or overtime (this is a key change from OTE, where only ordinary-hours commissions qualified)
Performance bonuses, Christmas bonuses, sign-on bonuses, referral bonuses, return to work bonuses
Bonuses in respect of ordinary hours work (including those labelled ex gratia)
Allowances
Task, skill, higher duties, leading hand, first aid, supervisor, and retention allowances (reported as allowance type KN)
Allowances for adverse working conditions (e.g. working at heights, in heat or cold, in confined spaces)
Allowances that partially compensate for expenses where the allowance is paid regardless of whether the expense was incurred, or where the amount has no relationship to the actual cost
Other
Payment in lieu of notice (termination)
Salary sacrifice to superannuation - where the underlying payment would be QE if paid directly to the employee
Directors' fees (working and non-working directors)
Return to work payments
Excluded from Qualifying Earnings
Overtime
Overtime payments, where ordinary hours are clearly identified in an award or agreement
Annual leave loading clearly linked to a lost opportunity to work overtime
On-call allowances for hours outside ordinary hours
Call back allowances
Cash out of TOIL in service
Bonuses solely for work performed entirely outside ordinary hours
Paid leave
Employer-paid parental leave (maternity, paternity, adoption leave)
Government paid parental leave
Community service leave, jury duty leave, and defence reserve leave
Workers' compensation where the employee is not required to work (including top-up payments)
Long service leave paid under a portable long service leave scheme
Allowances
Expense allowances paid with the reasonable expectation that the money will be fully expended by the employee - for example, a tool allowance where the employee is expected to use the full amount to supply and maintain their tools
Termination payments
Unused leave on termination (annual leave, long service leave, personal leave, RDOs, TOIL)
Redundancy, severance, golden handshakes, genuine redundancy payments above the tax-free limit, and other payments in consequence of termination
Salary sacrifice
Salary sacrifice to non-superannuation benefits
Salary sacrifice to superannuation where the underlying payment would not be QE (e.g. parental leave, overtime)
Note: Annual leave loading: Standard award-based leave loading (e.g. 17.5%) is QE. If your organisation has a specific arrangement where leave loading compensates employees for lost overtime, the relevant pay item's Include in Qualifying Earnings checkbox should be unchecked. Contact your payroll consultant if you are unsure how your leave loading is classified.
Note: Allowances: The QE treatment of an allowance depends on its purpose, not just its name. An allowance that is expected to be fully expended by the employee (such as a tool allowance or meal allowance fully used in the course of work) is generally not QE. If you are unsure about a specific allowance, refer to the ATO guidance or contact your payroll consultant.
Employees under 18
Under-18 and 30 hours or fewer in the pay week
Definitiv applies the same Superannuation Guarantee exemption rule to Qualifying Earnings that it applies to the SG liability. If an employee is under 18 years old at the payment date and worked 30 hours or fewer across the calendar week (Monday-Sunday) in which the payment falls, their Qualifying Earnings for that period will be set to $0.00 and no super liability will be generated for that period.
If the employee worked more than 30 hours in the pay week, the exemption does not apply - Qualifying Earnings is calculated normally and super is owed.
This rule is assessed week by week. For pay runs that span multiple calendar weeks, each week is assessed independently - Qualifying Earnings is only zeroed for weeks where the employee was under 18 and worked 30 hours or fewer. If another pay is made which brings the employee above 30 hours worked in that calendar week the Qualifying Earnings is re-calculated.
If super is being paid for an under-18 employee
If super is being paid for an under-18 employee who worked 30 hours or fewer in the pay week - for example, where the employer has chosen to pay super regardless of the exemption - Definitiv will calculate Qualifying Earnings normally for that period. This ensures the Qualifying Earnings figure (Code Q) reported in STP remains aligned with the super liability (Code L).
What "hours worked" means here
The hours check uses the same pay item flag as the existing SG exemption - only pay items marked as "included in hours worked" contribute to the weekly total. Exactly 30 hours does not trigger the exemption - the employee must have worked more than 30 hours for Qualifying Earnings to be retained.
If an employee has no date of birth recorded in their profile, Definitiv assumes they are 18 or older and calculates Qualifying Earnings normally.
What you'll see in the pay run
When Qualifying Earnings is zeroed out due to this rule, a message is displayed in the pay run against the affected employee - for example, "Qualifying Earnings zeroed for [Employee Name]: employee is under 18 and worked [X] hours (≤30) in the pay week." The Qualifying Earnings record is still created and visible in the Qualifying Earnings tab with a $0.00 value and the reason for exclusion, so you have a complete audit trail.
The employee's gross pay, net pay, tax, and all other pay amounts are not affected. Only the Qualifying Earnings figure and the STP Code Q value change.
Processing pay runs
Qualifying Earnings column in Pay Run Summary
Once Qualifying Earnings is active, the Pay Run Details Summary tab includes a Qualifying Earnings column. This column:
Appears between Gross Pay and Super in the column order
Displays the calculated QE amount for each employee in the pay run
Is always visible (not hidden or optional at this level)
Shows $0.00 for employees with no superable earnings
Is sortable and formatted as a dollar amount
For pay runs that include backpay adjustments (where a pay item's superable flag has changed), the Qualifying Earnings column shows the net amount including any historical adjustments.
Qualifying Earnings tab
In the Pay Run Employee Details view (accessed by clicking an individual employee within a pay run), a dedicated Qualifying Earnings tab shows a full breakdown of how that employee's QE total was calculated. The tab is split into two sections:
Included Items - each pay item that contributed to QE, showing the pay item name, component type, amount, and the reason for inclusion (e.g. "Ordinary wages - superable expense included in QE"). The section totals to the employee's QE figure.
Excluded Items - each pay item that was assessed but excluded from QE, showing the pay item name, amount, and the exclusion reason (e.g. "Non-superable item - excluded from QE"). This provides a complete audit trail of the calculation.
STP reporting
How dual reporting works
Definitiv automatically includes both Code L and Code Q in every STP lodgement from 1 July 2026 onwards. No additional steps are required at lodgement time - the dual values are generated based on the calculated pay run data.
Code | Description | Value |
L | Super guarantee liability | The amount of super owed for the pay period |
Q | Qualifying Earnings | The earnings the super was calculated on |
In a standard pay run: Super liability = Qualifying Earnings x applicable SG rate (e.g. 12%).
STP reports
The following reports in Payroll Reporting have been updated to include Qualifying Earnings data. QE columns are optional and can be toggled using the existing column controls in each report.
STP YTDs report
An optional Qualifying Earnings YTD column is available, showing each employee's cumulative QE from the start of the financial year. This figure resets to $0.00 on 1 July each year. Historical financial year data remains accessible by adjusting the date range.
STP Pay Runs report
Two optional QE columns are available:
Qualifying Earnings - the QE amount for the specific pay period
Qualifying Earnings YTD - the cumulative QE from the start of the financial year
Both columns integrate with existing sorting, filtering, and export functionality.
Employee self-service
Employees can view their Qualifying Earnings directly from their employee record under the Qualifying Earnings section in the left-hand navigation. This screen shows:
Summary three at a glance tiles showing the employee's latest QE amount and payment date, their cumulative YTD total since 1 July, and their MSCB Threshold status (e.g. Within Limit).
Super Guarantee Basis - displays the QE basis amount, the applicable SG rate, and the estimated super contribution for the period, along with an explanatory note summarising how super guarantee was calculated.
Component Breakdown - a table showing each pay item that contributed to QE, broken down by component type (e.g. OrdinaryWages), pay item name, and amount.
Qualifying Earnings History - a table showing QE per payment date, the cumulative YTD figure at that point, and the employee's MSCB status for that period (e.g. Within Limit).
Financial Year Summaries - a rollup by financial year showing total QE, number of pay periods, and the average QE per period.
This section is view-only - employees cannot edit any QE settings from here.
Backpay and retroactive changes
If a pay item's Include in Qualifying Earnings setting is changed, or if a backpay scenario results in a change to a superable pay item flag, Definitiv will automatically recalculate the stored QE amounts for the affected periods when the next pay run is processed.
The corrected QE figures will be reflected in the current STP submission. Historical STP lodgements are not automatically corrected - corrections flow forward through the current submission only, which is consistent with how super liability adjustments work under backpay.
Frequently asked questions
Does my organisation need to do anything to activate Qualifying Earnings?
Qualifying Earnings is activated automatically by Definitiv from 1 July 2026. No action is required to turn it on. Your pay items have already been migrated.
Do I need to review my pay items?
Yes. While pay items have been automatically migrated in line with ATO guidance, all pay items should be reviewed to confirm the Include in Qualifying Earnings checkbox is set correctly for your organisation's specific arrangements. You are responsible for ensuring your pay item configuration reflects the correct QE treatment for each payment type under the ATO's rules.
Will my super liability amounts change?
No. The Qualifying Earnings implementation does not change how super liability is calculated. Code L in your STP submissions will be identical to what it was before. Only the replacement of Code O with Code Q is new.
What if Qualifying Earnings is $0.00 for an employee?
If an employee has no pay items included in QE for the pay period, their Qualifying Earnings will be $0.00 and no super liability will be generated. This is expected for employees whose pay consists entirely of non-qualifying payments (e.g. overtime only).
Can I export the QE breakdown for audit purposes?
Yes. Pay run exports include QE breakdown detail at the pay item level. QE data is also available via the STP Pay Runs and STP YTDs reports, which can be exported to Excel or PDF.