With payday super set to begin on 1 July, now is the time for employers to get across the changes.
Most modern payroll systems already offer the option to pay super at the same time as wages. Taking advantage of this now can help smooth the transition and minimise cash-flow surprises—because from 1 July, every payroll run will effectively increase by around 12% once super payments are included.
New definitions you need to know
A key change is the introduction of qualifying earnings (QE). QE includes:
These amounts are paid on what the legislation calls QE day. Importantly, termination lump sums are excluded.
Super contributions must reach the fund within seven business days of QE day. Late payments may result in a Superannuation Guarantee Charge (SGC) assessment from the ATO.
Late payments: New rules and deductions
A major change is that late super contributions will now be tax deductible. However, this does not extend to:
If contributions are paid late but within 28 days, and before an SGC assessment is issued, they will reduce the SG shortfall. Notional earnings, an administrative uplift (60% of the SG shortfall plus notional earnings), and any choice loading will all become tax-deductible items.
Changes for high income earners
For those using the maximum contribution base, the cap, based on salary of $250,000, will now be calculated annually. Employers will have 30 days before the start of the period to apply for a shortfall exemption certificate. The ATO also has the ability to issue certificates retrospectively, which may simplify compliance for affected employees.
New employee requirements
Employers must make a new employee’s first super payment within two weeks. This may be challenging where new hires delay providing tax file numbers or super fund details. With STP reporting, the ATO will quickly detect missing contributions, so timely information gathering will be essential.
Clearing house changes
The Small Business Superannuation Clearing House will begin to be phased out from 1 July. Many super funds are moving to their own payment channels, and more detail should become available closer to the start date.
Start early
A common theme in all these updates is timing. Given the new rules, the ATO’s increased visibility through STP, beginning payday super processes early is strongly recommended.
Getting into the habit of paying super with each payroll now will make the transition smoother and reduce administrative pressure when the new laws take effect.