What Are Qualifying Earnings (QE)?
Qualifying earnings (ATO website) are the ATO's way of calculating employees' super guarantee contributions under Payday Super. From 1 July 2026, qualifying earnings (QE) need to be reported through Single Touch Payroll.
To make sure your pay items are configured to correctly report QE, we've added a checkbox that lets you mark pay items as qualifying earnings. Your existing pay items have a default setting assigned for this box. You should check that these settings are correct to ensure that QE is correctly reported to the ATO for pay runs filed in the 2027 financial year.
Not all pay items included in superannuation calculations need to be reported as QE, but if a pay item has Report as qualifying earnings selected, you can't clear the Include in super calculations checkbox.
Any leave items with the reporting category type O will be reported as qualifying earnings. Paid parental leave and worker's compensation can have their qualifying earnings setting edited.
Step 1: Global Review of Earnings, Allowances, and Leaves
To streamline your transition, Payroo has automatically updated your settings by adding a dedicated Qualifying Earnings column across your global configuration dashboards. By default, the system applies an automatic update, setting this column to "Yes" for standard tax tracking categories.
However, any custom categories must be verified manually. If an item should not attract super (like clear overtime or an expense reimbursement), you must explicitly apply an exclusion flag.
A. Reviewing and Disabling QE for Specific Earnings
Navigate to Settings > Payroll > Earnings.
Review your active categories. You will see the new Qualifying Earnings column, which defaults to Yes.
To alter an item, click the Edit icon next to the earning name.
Locate the checkbox: "Qualifying Earnings".
Note: When Un checked, this pay item will not be used to calculate the Qualifying Earnings.
Click Update to save your changes.
B. Reviewing and Disabling QE for Allowances
Navigate to Settings > Payroll > Allowances.
Locate the new Qualifying Earnings column on the summary.
Click the Edit icon next to the specific allowance name.
Un Tick the "Qualifying Earnings " box for any allowance type legally exempt from super calculations.
Click Update to save.
C. Reviewing Leaves (System Default Locked)
Paid leave taken during ordinary hours is legally classified by the ATO as part of your core Qualifying Earnings base. To guarantee your compliance, Payroo locks these items.
Navigate to Settings > Payroll > Leaves.
Review your categories. The Qualifying Earnings column defaults to Yes.
Please Note: These standard system leave types (such as Annual Leave, Sick/Personal Leave, and Compassionate Leave) cannot be edited or unticked because they are structurally required to count towards the superable base under modern payroll laws.
Step 2: Verifying and Overriding at the Employee Profile Level
Once the pay items are updated from payroll settings, verify your active employee settings. Payroo gives you full control right inside the employee profile, allowing you to explicitly include or exclude pay categories on an individual basis.
A. Verifying Employee Earnings
Navigate to Employees on the main sidebar menu and open the Employee Profile of the worker you want to check.
Select the Pay Rates tab, then click into the Earnings sub-section.
Notice the new Qualified Earnings column running parallel to their assigned pay rates.
Take Action: You can untick the box to actively include that earning item in this employee's QE calculations, or tick the box to exclude it from their superable profile.
Click Save.
B. Verifying Employee Allowances
Within the same employee Pay Rates tab, click into the Allowances sub-section.
Locate the new Qualified Earnings column visible next to their active allowances.
Take Action: Simply tick the box to include the allowance item in their active QE calculations, or untick the box to mark it exempt for this specific worker.
Click Save to update the file.
Mapping Guidelines: Quick Reference Matrix
Use the matrix below to cross-verify your global configuration tasks:
Payments Commonly Included in QE(Leave unchecked / Marked "Yes") | Payments Commonly Excluded from QE(Check "Don't include..." / Untick Box) |
• Base salary and ordinary hours worked
• Casual loading & shift penalties
• Paid annual, sick, personal, & carer's leave
• Long service leave taken inline with work
• Commissions & bonuses
• Payments in arrears & return to work incentives | • Paid parental leave lines
• Expense-reimbursement allowances
• Standard travel or meal allowances
• Explicit overtime hours & time in lieu hours
• Redundancy & severance termination payouts
• Unused leave paid out upon termination |
Calculation & Reporting Impact
Qualifying Earnings Example
John works part-time as a barista and clocks 30 hours per week at an hourly rate of $35.00.
Weekly Gross QE base: $1,050.00
Superannuation Guarantee (SG) Rate: 12%
Calculation:
$$\text{QE Gross} \times \text{SG Rate} = \text{Super Liability}$$
$$1050 \times 0.12 = 126$$
Result: John's employer must report a $126.00 super liability via STP and transmit the funds to his designated clearing house within the mandatory Payday Super timeline.
Important things to know
Audit Before Processing: Ensure all global earnings categories, allowances, and profile pay items are reviewed and saved before completing any payroll run dated on or after 1 July 2026.
STP Phase 2 & Payday Super Reporting: Both your Qualifying Earnings balances and corresponding super liabilities will be transmitted directly to the ATO with each finalised pay event.
Consequences of Misconfiguration: Incorrect mappings directly risk triggering an automated Superannuation Guarantee Charge (SGC) audit line, resulting in mandatory interest penalties, administrative fees, and employee compliance disputes. If you are unsure whether a custom corporate allowance counts as a Qualifying Earning, seek clarification from your registered tax adviser or accountant before editing system defaults.