On 18 September 2024, the Australian Government released a Factsheet detailing the upcoming reforms with the Superannuation Guarantee (SG) regime, known as Payday Super.
The Payday Super regime was initially announced in the 2023-24 Federal Budget with an aim to align the timing of payment of SG with the payment of salary and wages. Legislative amendments are expected to be introduced into Parliament before the end of the calendar year.
Currently, SG is required to be paid quarterly with the enforcement of the Superannuation Guarantee Charge (SGC) on any payments made 28 days following the end of the relevant quarter.
The Payday Super regime is proposed to take effect from 1 July 2026.
‘Payday’ has been clarified in the Factsheet as being the date on which an employer makes a payment of Ordinary Time Earnings (OTE) to an employee. Each time a payment of OTE is made, an employer has 7 calendar days to ensure that payment of SG contributions have arrived in the employee’s superannuation fund.
The 7-day period is intended to provide adequate time for the movement of funds through payroll systems and clearing houses. A new SGC regime will apply and employers will be liable to pay SGC on contributions that are made outside this 7 day period.
| Current regime | Updated regime | |
| Payment of SG contributions | SG contributions must be paid and received in a complying superannuation fund 28 days after the end of the relevant quarter. | SG contributions must be paid and received in a complying superannuation fund 7 calendar days after the ‘Payday’ of the OTE. |
| Outstanding SG shortfall | The SG shortfall amount is calculated based on Salary and Wages paid to employees in the relevant quarter. | The SG shortfall will be calculated based on OTE, to be consistent with the base used for calculating the SG. |
| Interest | Nominal interest of 10% per annum is payable on the SG shortfall amount. Interest accrues from the start of the relevant quarter. | Notional earnings – Interest calculated daily at the General Interest Charge (GIC) rate on a compounding basis. Interest accrues from the day after the due date. |
| Administrative charge | Administrative charge of $20 per employee, per quarter. | Administration charge calculated as an uplift of the SG shortfall component. Will be levied up to 60% of the SG shortfall. This amount may be reduced where employers voluntarily disclose. |
| Deductibility of SGC | SGC is not tax deductible. | SGC will be tax deductible other than the payment of interest and penalties imposed after Australian Taxation Office assessment. |
| Part 7 penalties | Penalties apply at 200% of the SGC amount (i.e. SG shortfall, admin charge and nominal interest). This amount can be remitted if certain requirements are met (e.g. voluntary disclosure). | Updates to Part 7 penalties not discussed in the Factsheet. |
Assessments of the updated SGC will be made by the Australian Taxation Office (ATO). Following assessment by the ATO, additional interest and penalties (non-deductible) may apply. This includes:
To support employers in the transition to the Payday Super regime, the following changes have been proposed:
The information provided in the Factsheet shows a clear intention for increased visibility regarding compliance with the superannuation guarantee regime and managing instances of ‘wage theft’. The introduction of Payday Super appears to be working in line with recent changes to Fair Work rules to reflect superannuation as an entitlement under the National Employment Standards.
In order to ensure readiness for the Payday Super regime, businesses should review current governance and control mechanisms to minimise potential risks of SGC liability. This includes:
If you would like further information on the Payday Super regime or require assistance reviewing and minimising your SGC liability, please contact the author or our superannuation specialist, Clive Todd on 07 3218 3900.