Unpaid superannuation is increasingly being treated as a form of wage theft and is recognised as being detrimental to the retirement outcomes of many Australians. In response, the 2023–24 Federal Budget proposed a series of measures aimed at reducing the structural causes of unpaid super guarantee (SG). These measures include paying SG at the same time as salary and wages, known as payday super, and enhancing the ATO’s data-matching capabilities to strengthen SG compliance.
Consultation on payday super models
The government has now released a consultation paper outlining two proposed models to implement payday super:
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the employer payment model
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the due date model
Under either model, the practical burden falls on payroll, each pay run will need to trigger a corresponding super payment or at minimum initiate the process within a narrow window. Businesses running payroll in-house should consider whether their current systems and processes can support this level of frequency. Bramelle Partners’ outsourced payroll services handle the processing, calculations and reporting obligations on your behalf, reducing the risk of errors that could trigger SG charge liability under the new regime.
How the current SG charge works
At present, SG contributions are due quarterly. For example:
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for the quarter 1 July to 30 September, SG must be paid by 28 October
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if not paid, the SG charge statement and payment are due by 28 November
The charge includes:
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the unpaid SG amounts
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nominal interest, currently set at 10% per annum
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an administration fee of $20 per employee, per quarter
Proposed changes to the SG charge
To support payday super, the consultation paper suggests changes may be needed to:
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the nominal interest rate
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the size or structure of the administration fee
To reduce cases where employers are penalised for minor errors or circumstances outside their control, the paper also proposes giving the Commissioner of Taxation limited flexibility to:
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remit or reduce the SG charge, or
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extend the due date for payment
This flexibility would be tightly defined in legislation and would not amount to a broad or general discretion.
Employer payment model
Under the employer payment model:
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SG contributions would be required to be paid on payday
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if SG is not paid on payday, the employer would immediately become liable for the SG charge
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nominal interest would accrue from the payday itself
The ATO would reconcile Single Touch Payroll (STP) data with Member Account Transaction Service (MATS) data to confirm that the correct super contributions have been received by the employee’s fund.
Due date model
Under the due date model:
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the current structure of the SG charge would largely be retained
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an employer would become liable for the SG charge if contributions are not received by the fund by a specified due date after payday
Based on early consultation, Treasury and the ATO consider a reasonable due date to be between 8 and 13 days after an employee’s payday.
ATO compliance approach under payday super
Regardless of which model is adopted, the ATO would rely on enhanced reporting by employers and super funds to:
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verify that SG has been paid on payday or received by the fund by the due date
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initiate SG charge assessments more frequently
This approach is expected to reduce reliance on employee notifications and enable earlier intervention where non-compliance occurs.
Timing and next steps
Following the consultation process, the government will redesign the super compliance framework to incorporate payday super. Subject to the passage of legislation, payday super is proposed to commence from 1 July 2026.
Transitional arrangements may also be introduced to ensure that concessional contributions caps are not exceeded due to timing issues during the transition to the new system.
Key takeaway for employers
Payday super represents a significant shift in how superannuation obligations will be met and enforced. Employers should begin preparing now by reviewing payroll processes, cash flow management and reporting systems to ensure they can meet more frequent SG payment requirements once the reforms are implemented.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
