Transport association takes on the Tax Office
The reinterpretation of Ordinary Time Earnings (OTE) by the Australian Taxation Office and subsequent changes in the calculation of superannuation entitlement is causing transport operators concerns over their financial viability.
The Victorian Transport Association (VTA) met with the Minister for Superannuation, Senator Nick Sherry, on 12 January to discuss the ATO’s proposed change to the interpretation of ‘ordinary time earnings’.
VTA CEO Philip Lovel, who attended the meeting said, “This was a significant meeting as it is a crucial issue facing the industry and could lead to substantial cost increases in the order of tens of millions of dollars to transport operators”.
The VTA was joined by its industrial affiliate, the Australian Road Transport Industrial Organisation (ARTIO), an industrial organisation of employers registered under the Workplace Relations Act 1996.
The background of this issues stems from the ATO re-defining Ordinary Time Earnings (OTE) to include ‘regular, usual and systematic overtime.
The accepted practice of calculating OTE in the long distance sector has been by multiplying a driver’s base rate by 130% and then paying 9% of that product to a complying superannuation fund. This practice has been based around written advice received from the Deputy Commissioner Superannuation in a letter dated 1 September 1995. As the VTA understands it, this conclusion was based on the ATO’s interpretation of Ruling 94/4 and applying it to drivers employed specifically under the Transport Workers’ (Long Distance Drivers) Award 2000.
There has been much debate on whether or not this methodology is consistent with the new law requiring super to be calculated on OTE without recourse to any other concepts. Mr. Lovel asserts: “This is mostly due to inconsistent information on the ATO website and a clear disregard for well understood industrial concepts.”
In August 2008, the VTA met with senior officials from the ATO to attempt to clarify the ruling. Following this, in September 2008, the VTA wrote to the ATO requesting confirmation of earlier advice on how to calculate OTE for a long distance driver.
The meeting on 12 January was to discuss the ATO’s proposed change of interpretation to include ‘regular, systematic and usual’ overtime in calculating an employee’s entitlement to superannuation. Those attending on behalf of VTA/ARTIO were Phil Lovel, Paul Ryan and Laurie D’Apice, the NSW ARTIO President.
VTA CEO, Philip Lovel made the following points:
1 The ATO’s change in the interpretation of ‘ordinary time earnings’ does not have any legislative support and in fact is inconsistent with the explanatory memorandum prepared at the time.
2 The government’s own new National Employment Standards (NES) which will commence later this year specifically acknowledge that ‘ordinary hours of work’ exclude the payment of overtime and penalty rates.
3. The new interpretation will be impossible to implement, other than with the benefit of hindsight because ‘regular, usual and systematic’ overtime can only be determined after the event.
4. The administration costs associated with the ‘new view’ will be enormous and could lead to duplicate payroll systems being required for processing overtime – one where it is not superannuable and the other where it is.
5. It will require substantial additional resources at yard/depot level as a pay roll clerk cannot determine what is, or is not, ‘regular’ overtime.
Mr. Lovel said: “The VTA has advised members to review super contribution methodology and to continue making superannuation contributions on behalf of your employees as they have done in the past. The VTA will also be making further submissions to both the ATO and the Minister.”
Mr. Lovel concluded: “We have had discussions with the Australian Mines and Metals Association (AMMA) who have members confronting similar issues. This is a big issue that will critically affect the finances of many companies with some facing around 50-60% additional superannuation exposure. The VTA is willing to take up the torch on behalf of the industry and work to resolve this matter.”