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Payday super changes – what does it mean for employers?

22 May 2023 3 min read

In the latest budget, the federal government announced the move to payday super. For employers, this means you will be required to pay your employees superannuation contributions at the same time as their salary and wages — instead of quarterly. While for employees, the change will see them benefit from the compounding returns on their investment and help them to keep track of their overall super savings.

What changes does your business need to make for payday super?

Employers have until July 2026 to start paying employees super with their pay cycle. For businesses already operating under this system, no change is required. For those who need to make the adjustment, you can do so at any time before the 2026 cut-off. Making the change as soon as possible will help position your business as an employer of choice.

Why the ‘payday’ change is important?

In addition to compounding interest on investment returns, the change will assist close to 3 million Australians who lose an average of $1,700 of super annually.1

While most employers do the right thing and pay super contributions, there are cases of employers not paying on time, the correct amount or, in some cases, not at all.

How does payday super affect employees?

Payday super will particularly help casual workers and women.

Industry Super Australia has commissioned modelling that demonstrates that a 30-year-old earning the age-based median wage could be $8,000 better off at retirement if paid super fortnightly instead of quarterly.2 This is because contributions would compound for longer if paid more frequently.3

Payday super will also mean casual workers are at less risk of not receiving super contributions altogether. Unfortunately, this can happen when a casual worker moves on from the position before their quarterly super payment is due or when a business folds or goes bankrupt. It’s important to note that casual workers are entitled to super, even if they are only with the business for a short period.

As a general rule, all employees who are Australian citizens, not domestic/private workers and are 18 years of age and over are entitled to superannuation contributions. This includes workers who are part-time or casual.

Female workers are particularly set to benefit. An Industry Super Australia analysis of the 2019-20 tax file showed that one in five women are underpaid super.4 Almost 40% of women in their 20s who earned less than $25,000 missed out on an average of $570 a year.5 The impact of unpaid super for the individual can be substantial.

What happens if an employer doesn’t pay super on payday after the July 2026 cut-off?

At present, employers must pay super quarterly and pay the correct amount. If an employer does not pay or underpays super — whether now or from the 2026 change, they face the super guarantee charge.

What’s the super guarantee charge (SGC)?

The super guarantee charge (SGC) is a fine employers will need to pay for incorrect, unpaid or late super payments.

The ATO outlines what the SGC is made up of:

  • super guarantee shortfall, including:
    • super calculated on salary and wages (including any overtime)
    • any choice liability, based on the shortfall and capped at $500
  • nominal interest of 10% per annum (accrues from the start of the relevant quarter)
  • an administration fee of $20 per employee per quarter.

You can work out the SGC using the Super guarantee charge (SGC) statement.

Learn more about SGC

If a business fails to pay the SGC, the ATO can take stronger action, including issuing an ATO penalty notice. The charge is not tax deductible; another reason why most employers do the right thing and make their super guarantee contributions on time.6

Need help?

We know that changes can be sometimes confusing — but they don’t have to be. Our Customer Relationship Managers are here to help discuss any concerns. Reach out today.

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