As part of the Securing Australians’ Superannuation Package announced in the 2023-24 Budget, the Government has proposed a “Payday Super” reform. Under this proposal, starting from 1 July 2026, employers will be required to pay their employees’ superannuation guarantee (SG) contributions simultaneously with their salary or wages, rather than on the current quarterly schedule.

What Do the Proposed Changes Mean for You?

A newly released Government fact sheet outlines some key elements of this policy:

SG Contributions to Be Paid on Payday

From 1 July 2026, SG contributions must be paid on “payday,” which refers to the date an employer makes an ordinary time earnings (OTE) payment to an employee. Alongside this, a new 7-calendar-day “due date” will be established for these contributions to reach an employee’s superannuation fund. There will be limited exceptions: for small or irregular payments made outside the usual pay cycle, these will not be considered a payday until the next OTE payday occurs. Additionally, contributions for new employees will not be due until after their first two weeks of employment.

Updated SG Charge

The framework for the SG charge will be revised to accommodate the payday super environment, emphasizing the importance of timely payments. The updated framework will:

• Ensure employees are fully compensated for any delays in receiving their superannuation.
• Encourage employers to promptly disclose and rectify any unpaid super amounts.
• Impose larger penalties on employers who consistently fail to comply.

The ATO will assess SG charges, which can be triggered by voluntary disclosures from employers, notifications from employees, or detected non-payments.

If the SG charge is not settled by the due date, additional interest and penalties will apply. For more detailed information about changes to the SG charge, refer to the fact sheet.

Late Contributions

Contributions will automatically count towards the earliest payday not yet assessed for SG charge with an outstanding shortfall, eliminating the need for employers to elect or specify the period for each late contribution.

Additional Proposed Supporting Changes

To facilitate the transition to Payday Super and protect employees during onboarding, several changes are proposed:

• The deadline for super funds to allocate or return contributions will shorten from 20 business days to 3 days.
• Employer reporting through Single Touch Payroll (STP) will include employees’ OTE and total super liability, ensuring accurate identification of the SG.
• The ATO’s Small Business Superannuation Clearing House will be phased out on 1 July 2026, with support provided to small businesses in transitioning to appropriate payroll software solutions.
• Revised choice of fund rules will simplify the process for employees to nominate their super fund when starting a new job.
• Advertising for super products during onboarding will be limited to MySuper products that have passed the most recent performance test to safeguard employees from poor outcomes.

What’s Next?

Legislative design for these changes is anticipated in the second half of 2024, and the ATO will engage with the industry to address administrative details. It’s essential to stay informed, as some aspects may evolve based on consultation feedback.