In the 2023-24 Federal Budget, the government announced that from 1 July 2026, employers are required to pay their employees’ super at the same time as their salary and wages, instead of by the 28th day following the end of each quarter.
Background
For over 30 years, employers have been required to make compulsory super contributions on behalf of their employees for the purpose of providing them with retirement income and supplementing or replacing their reliance on the Age Pension.
In the past, whether an employer deliberately avoided its obligations or made an honest error, non-payment and late payment of super were not always pursued by the Australian Taxation Office (ATO) unless an employee inquiry was made.
While the introduction of Single Touch Payroll has brought greater transparency and improved compliance, the ‘same-day’ super measures are intended to further enhance the quality of the super guarantee (SG) system.
Impact on Employers
- Aligning super with regular pay cycles will streamline their payroll systems
- Having simpler SG rules will reduce the risk of miscalculation and administrative oversights, potentially avoiding unnecessary charges and penalties
- Makes those who fail to meet their SG obligations more accountable
Impact on Employees
- Gives greater confidence in the system due to the government’s commitment to employee well-being
- Easier to keep track of payments due and identify any discrepancies
- Increased frequency of payments should ultimately enhance retirement outcomes
- Leads to more active engagement with their super
Preparation for Same-Day Pay
The proposed start date of 1 July 2026 gives employers, super funds and payroll providers sufficient time to review their processes in preparation for the change to payday super and ensure all systems are in place.
Employers may need to update employment contracts where necessary and also consider how the arrangements will affect their cash flow.
Additional Resources
The ATO will be provided with additional resources to help it detect and address unpaid super by enforcing compliance and identifying non-compliance at an earlier stage.
Treasury has consulted with industry and stakeholders regarding input on the definition of ‘payday’ and has proposed that payday is any time a payment is made to an employee that has an Ordinary Time Earnings (OTE) component.
We await further details.
Contact Pilot
If you would like assistance in getting your business ready for these changes, contact Angela Stavropoulos or Kristy Baxter on taxmed@pilotpartners.com.au or call 07 3023 1300.