As you may be aware, the following Bills passed by both Houses on 4 November and are awaiting Royal Assent:
Below are some key definitions and a summary of the legislation to assist our members in navigating the changes which will become effective 1 July 2026.
Definitions:
Qualifying Earnings (QE) - similar to Ordinary Time Earnings (OTE). QE includes:
Qualifying Earnings Day (QE Day) – simply put, QE day is payday (the day an employer makes a payment to QE to an employee
Individual Base Shortfall - Contributions that should have been paid minus contributions that have been paid
Individual final SG shortfall – the final shortfall is the Individual base shortfall minus any late contributions. This amount is reduced by any late contributions and will be used to determine the SG Charge assessment. There will no longer be a late payment offset.
Notional earnings - the interest component to compensate employees for lost superannuation fund earnings when their contributions have not been received in full and on time. These monies go to the employee’s super fund General Interest Rate GIC. This amount is calculated as per the Tax Administration Act.
Administration uplift – a charge levied on the employer for the cost of enforcing the law (these monies go to the ATO). The charge is 60% of the sum of the total of the employer’s individual final SG shortfalls and individual notional earnings components for the QE day.
Choice Loading - an additional amount imposed on employers if they do not comply with choice of fund requirements. The choice loading is an additional 25 percent calculated on the value of the eligible contributions for any QE day where the employer has not complied with the employee’s choice of fund selection.
Voluntary disclosure statement (VDS) – employers are encouraged to lodge a Voluntary Disclosure Statement
New Payments Platform (NPP) – new IT infrastructure allowing contributions via Super Stream to be allocated in ‘real-time’. Additionally, error messaging via SuperStream will be enhanced to assist employers in meeting their SG obligations
Maximum Superannuation Contributions Base (MSCB) - the maximum amount of SG contributions payable by an employer for an employee in a year
| Summary of legislative requirements |
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Superannuation contributions will need to be in the employee’s superannuation account within 7 business days of QE day. Exceptions to this rule include:
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| Following an assessment, an employer will have 28 days to pay the assessment. If 28 days have passed and the employer has not paid the assessment, the ATO will issue a Notice to Pay and additional late penalty fees will apply. |
| The SG Charge will now be tax-deductible. However, any interest and penalties after an SG Assessment will not be tax deductible |
| No requirement to complete an SG Charge Statement. Instead, an employer can complete and lodge a Voluntary Disclosure Statement (VDS). The Design of the Voluntary Disclosure Statement is still in the making. At this stage, the design looks similar to the current SG Charge statement available on the ATO website with additional information regarding the SG date (eg first contribution, out-of-cycle payment, exceptional circumstances) |
| SuperStream data and payment standards, including enhanced error messaging, will be revised to accommodate faster payments |
| Employers will need to report both the Qualifying Earnings (QE) and the SG liability under STP. Your Digital Service Providers (DSP) are working on specifications to be provided by the ATO to enable this reporting functionality. |
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The MSCB will now apply annually, not quarterly. The formula is calculated as follows: Concessional contributions cap x 100 Charge percentage If an employee changes employers during the year and will ultimately exceed the MSCB, the employee can apply to the ATO for an exemption certificate (similar to the provision that is currently available for high income earners ) |
We will provide further updates once the Bills receive Royal Assent.