What OTE Means in a Job Offer
On-target earnings is how sales, account management and recruitment roles quote pay: one number that assumes you hit your target. It is a contract term, not a legal one, so read the offer for three things: the base (guaranteed), the target the variable pay is measured against, and whether commission is capped. An uncapped plan pays more than OTE when you beat target; a capped one stops at a set amount.
| Offer | Base | Variable at target | Split |
|---|---|---|---|
| $120,000 OTE | $90,000 | $30,000 | 75:25 |
| $120,000 OTE | $80,000 | $40,000 | 67:33 |
| $120,000 OTE | $60,000 | $60,000 | 50:50 |
Split = base ÷ OTE. The same OTE can carry very different risk.
What You Earn Above and Below Target
With an $80,000 base and $40,000 at target (a $120,000 OTE), assuming commission scales in a straight line with results:
| Target hit | Earned before tax | Super (12%) | Take-home a year |
|---|---|---|---|
| 0% | $80,000 | $9,600 | $63,880 |
| 50% | $100,000 | $12,000 | $77,480 |
| 80% | $112,000 | $13,440 | $85,640 |
| 100% | $120,000 | $14,400 | $91,080 |
| 120% | $128,000 | $15,360 | $96,520 |
| 150% | $140,000 | $16,800 | $104,330 |
2026-27 resident tax, Medicare levy and LITO; no HECS. Your plan may pay differently (for example, higher rates above target or nothing below a threshold), so check your commission schedule. See the commission tax calculator for tax on a single payment.
OTE in Super: Ordinary Time Earnings
On your payslip and in super law, OTE means something else: ordinary time earnings, the pay for your ordinary hours of work. The ATO lists “commission payments” as ordinary time earnings, so your employer must pay the 12% super guarantee on commission as well as base salary. Commission solely for work done entirely outside ordinary hours was the exception; from 1 July 2026 super is worked out on qualifying earnings, which include that commission too. Check that super appears on each commission payment, and use the super calculator to check the year’s total.
OTE and the High Income Threshold
If no award or enterprise agreement covers you, you can only make an unfair dismissal claim if your earnings are below the high income threshold, $190,100 from 1 July 2026 ($183,100 before). The Fair Work Commission excludes payments that can’t be determined in advance, such as commissions, incentive payments and bonuses. So a $250,000 OTE on a $150,000 base is assessed at $150,000. Guaranteed amounts, salary sacrifice and the agreed value of non-monetary benefits (such as private use of a car) can count.
Commission and the Minimum Wage
Commission can be an incentive on top of your pay or, where your award or enterprise agreement allows it, your whole wage. If no award or agreement covers you, the Fair Work Ombudsman says you can be paid commission but must still get at least the National Minimum Wage. If you are covered by an award, check its commission clause on our award rates pages.
Related Calculators and Guides
- Commission Tax Calculator: tax withheld on a commission payment
- Bonus Tax Calculator: the same for bonuses
- Salary Package Calculator: base, super and benefits together
- Take-Home Pay Calculator: any salary after tax
Frequently Asked Questions
OTE salary questions and answers
What does OTE mean in a salary?
OTE means on-target earnings: your base salary plus the commission or bonus you would earn if you hit 100% of your sales target. A job advertised at $120,000 OTE with an $80,000 base pays $80,000 guaranteed and up to $40,000 more at target. It is not a guaranteed amount.
Is OTE the same as salary?
No. Your salary is the base, which you are paid regardless of results. OTE adds the variable pay you are expected to earn at 100% of target, so you can earn less than OTE in a bad year and more in a good one if commission is uncapped.
What is a good OTE split?
There is no legal standard. The split is simply base divided by OTE: $80,000 base on $120,000 OTE is 67:33. The higher the base share, the more of your pay is guaranteed and the more counts for things based on fixed earnings, like the Fair Work high income threshold.
Is super paid on commission in Australia?
Yes. The ATO lists commission payments as ordinary time earnings, so the 12% super guarantee applies to commission as well as base salary. From 1 July 2026 super is calculated on qualifying earnings, which also include commission for work done entirely outside ordinary hours.
What does OTE mean for super?
In super, OTE means ordinary time earnings: what you are paid for your ordinary hours of work, including commissions and shift loadings. It is a different term from on-target earnings, even though both are shortened to OTE.
Does commission count towards the high income threshold?
No. The Fair Work Commission says earnings for the $190,100 high income threshold exclude payments that can't be determined in advance, such as commissions, incentive payments and bonuses. Only your base and other guaranteed pay count.
Can I be paid commission only?
Only if your award or enterprise agreement allows commission-only pay. If no award or agreement covers you, you can be paid commission but must still receive at least the National Minimum Wage, according to the Fair Work Ombudsman.
How we worked this out▼
OTE = base + variable pay at 100% of target. Earned = base + target × attainment, assuming a straight-line plan. Super = 12% of earned pay up to the maximum contribution base, because commission is ordinary time earnings (ATO). Take-home uses this site’s 2026-27 resident tax engine. The high income threshold figure and what counts toward it are from the Fair Work Commission, read 24 September 2026.
On-target earnings has no statutory definition; this page describes the arithmetic, not any employer’s plan. General information, not advice.
Sources & References
- 1List of payments that are ordinary time earnings— Australian Taxation Office
- 2High income threshold— Fair Work Commission
- 3Piece rates and commission payments— Fair Work Ombudsman
Last verified: 24 September 2026. Our content is based on the latest information from official Australian government sources.
Anita Bell
AuthorFounder & Senior Bookkeeper
Accountancy degree (2015); certified in Xero, QuickBooks Online, MYOB, Saasu, Zoho and Reckon One
Anita Bell earned her accountancy degree in 2015 and has worked as a senior bookkeeper with Prime Bookkeeping for over 5 years. This built her skills in Australian and New Zealand tax legislation and industry regulations. She is certified in Xero, QuickBooks Online, MYOB, Saasu, Zoho and Reckon One, and works with payroll and rostering software including Gusto, Deputy, Tsheets and KeyPay. She has strong experience in hospitality, building and construction, financial services, real estate, ecommerce, and medical and health services.
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