Payday super: policy design released

As part of the Securing Australians’ Superannuation package announced in the 2023–2024 Federal Budget, the government proposed a “payday super” reform. Instead of the current requirement to pay quarterly, under the proposal employers will be required to pay their employees’ superannuation guarantee (SG) contributions at the same time as their salary or wages (on “payday”) from 1 July 2026.

What do the proposed changes mean for you? A newly released government fact sheet sets out some key elements of the policy.

Employers will need to pay SG alongside wages

From 1 July 2026, SG contributions will need to be made on “payday”. This is the date an employer makes an ordinary time earnings (OTE) payment to an employee. When OTE is paid, there will be a new seven-calendar-day “due date” for the payment to arrive into an employee’s superannuation fund. Some limited exceptions will apply: small or irregular payments outside the usual pay cycle won’t be considered a payday until the next OTE payday occurs; and contributions for new employees won’t be due until after the first two weeks of employment.

Updated super guarantee charge

The SG charge framework will be updated for the payday super environment, reflecting the seriousness of underpayment or late payment of the SG. The revised framework will: 

• ensure that employees are fully compensated for any delays in receiving their super; 
• incentivise employers to quickly disclose and correct any unpaid super amounts; and
• include larger penalties for employers who repeatedly do the wrong thing.

Assessments of the SG charge will be made by the ATO and can be triggered by voluntary disclosure by an employer, an employee notification, or where there is a non-payment detected by the ATO. If the SG charge is not paid by the due date, additional interest and penalties will apply. In-depth information about the changes to the SG charge can be found in the fact sheet.

Late contributions

Contributions will automatically count towards the earliest possibly payday not yet assessed for SG charge and which still has an outstanding shortfall so employers no longer need to make an election or choose the period for which each late contribution should count.

Other proposed supporting changes

Changes to support the transition to payday super, and to protect employees during onboarding, include the following:

• The deadline for super funds to allocate or return contributions will reduce from 20 business days to three days.
• Employer reporting in Single Touch Payroll (STP) will include employees’ OTE and total super liability, ensuring correct identification of the SG.
• The ATO’s Small Business Superannuation Clearing House will be retired on 1 July 2026. The ATO will support small businesses in transitioning to suitable payroll software solutions.
• Revised choice of fund rules will apply to make it easier for employees to nominate their super fund when starting a new job.
• Advertising of super products during onboarding will be limited to MySuper products passing the most recent performance test, to protect employees from poor outcomes.

What’s next?

Legislative design is planned for the second half of 2024, and the ATO will engage with industry to inform the administrative aspects. It’s important to remember that some of these details may be refined as a result of consultation, so keep an eye out for emerging news.

Source: Treasury Publication - Payday Super ; ATO - Payday superannuation