Payday super: what you need to know

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Payday super is the requirement to pay your employees’ Super Guarantee (SG) entitlements on the same day you pay their salary and wages, rather than quarterly.

company meeting

What's the change?

If legislated as proposed, employers will be required to pay super at the same time as salary and wages rather than quarterly.

This will enable employees to match up their payslip with their super contribution in real time – helping to reduce employer non-payment.

The new timing will also enable the Australian Tax Office to more easily identify instances of late or underpayment of SG. They’ll also be able to act more quickly rather than waiting until the end of the quarter.

There’s also financial benefits for the individual. For example, a government report showed that a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5% better off at retirement if their super was paid on payday.*

How will this affect your business?

The government’s intention is that more frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books, but it will be in the passage of the legislation that will prove whether that intention is fulfilled in the design of Payday super rules which are adopted.

There are several complexities at play including changes to the Superannuation Guarantee charge mechanisms; applicable penalty regimes; and superannuation threshold consequences. The government commenced a consultation process in October 2023** and some respondents to that consultation have called out the potential problems for employers.***

EY partner, Tanya Ross Jones told TelstraSuper that while many businesses – particularly large employers - were already paying super on, or close to, the same day as they paid wages, legislating ‘real time’ Payday super may be more complex than it seems.

“This is a bigger change than most people appreciate. Just as the shift to Single Touch Payroll was a substantial change and required a ton of guidance from the ATO, Payday super could fundamentally change the way most payroll systems currently operate by involving more detailed reporting each pay period and less opportunity to reconcile each quarter, which is the way it works at the moment,” Ms Ross Jones said.

A key issue, according to Ms Ross Jones, will be ensuring employees are paid the correct amount of super if there are changes in their payroll information or gaps, such as new employees not providing super fund details.

“Everything to do with payroll can potentially involve changes and retrospective adjustments. Employers will need to be able to make these adjustments without being penalised.”

It is hoped that soon-to-be-released draft legislation on PayDay super will provide more clarity and certainty about such issues.
“Treasury is at the first stages of consulting on how the new system might work. We have highlighted that it would make sense to address the stumbling blocks in the system that make it difficult for employers to get it right first time, to promote a better experience all around.”

Can we help?

Looking for help with employer super? If you need assistance with this proposal – or any other super matter – TelstraSuper can help. Get in touch with our employer super experts at [email protected] or 1300 544 889


**Consulting on payday super | Treasury Ministers
*** Securing Australians' superannuation |
Any general advice has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice, you should consider whether it is appropriate to your individual circumstances. Before making any decision, you should obtain and read the relevant Product Disclosure Statement and Target Market Determination or call us on 1300 033 166 for copies of these documents. You may wish to consult an adviser before you make any decisions relating to your financial affairs. To speak with an Adviser from TelstraSuper Financial Planning call 1300 033 166.