Starting from 1 July 2026, employers in Australia will be required to pay their employees' superannuation contributions at the same time as their salary and wages. This marks a significant shift from the current system, where super contributions are typically paid quarterly.
Key Details of the Payday Super Measure
On 2 May 2023, the Australian Government announced the introduction of this new measure, known as "Payday Super." However, as of September 2024, this legislation is not yet in effect. The Treasury and the Australian Taxation Office (ATO) will collaborate with industry stakeholders to fine-tune the implementation before the deadline in 2026.
What’s Changing?
Timely Super Payments:
Employers will be required to pay their employees' Super Guarantee (SG) at the same time as wages. To avoid penalties, these contributions must be received by the employee's super fund within 7 days of payday. Failing to meet this deadline could lead to the Super Guarantee Charge (SGC).
Super Guarantee Charge (SGC) Updates:
- Outstanding SG Shortfall: Unpaid contributions by the SGC assessment date will be calculated based on Ordinary Time Earnings (OTE).
- Notional Earnings: An interest component ensures employees are compensated as if their contributions were paid on time.
- Administrative Uplift: A charge covering the cost of enforcement, with additional interest and penalties applying if the SGC remains unpaid.
Importantly, SGC will remain tax-deductible, aligning it with the income tax treatment of super contributions.
Changes in Superannuation Processes
Small Business Superannuation Clearing House (SBSCH) Decommission:
The SBSCH will be retired from 1 July 2026, as advancements in payroll software provide more efficient and accurate options for super payments. Small businesses will be supported in transitioning to new commercial alternatives before the system is decommissioned.
SuperStream and Single Touch Payroll (STP) Updates:
Super funds will have just 3 business days (reduced from 20) to allocate or return contributions, improving efficiency for both employers and super funds. Updates to the SuperStream system will enhance error messaging, while STP reporting will be expanded to include both OTE and total super liability for each employee, ensuring the correct SG amounts are captured.
While the Payday Super system is a few years away, employers should start preparing for these changes now. The streamlined process will ensure that employees receive their super in a timely manner, and businesses must be ready to comply with these new requirements to avoid penalties. Stay informed by following updates from the ATO and Treasury as the implementation date approaches.
For more detailed information, you can refer to the official Treasury fact sheet.
Related: ATO Targets Late Superannuation Payers with Hefty Fines
Have you noticed our #FridayExpertTips... here's one that relates to Superannuation
“Superannuation: Make sure any contributions you make are within the contribution caps, so you don’t pay a penalty tax."
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