ATO Urges Employers to Prepare for Superannuation Changes
The Australian Taxation Office (ATO) is prompting employers to get ready for upcoming changes regarding superannuation payments. Starting in July next year, employers will need to pay their employees’ superannuation simultaneously with their salaries.
With the recent passage of the Payday Super Bill, failing to deposit super into an employee’s fund within seven days of payday could lead to hefty penalties. Until now, contributions were typically made quarterly.
Emma Rosenzweig, Deputy Commissioner at the ATO, described this super payday shift as a “once in a generation” change and urged businesses to start preparing promptly.
“Rather than procrastinating, employers should begin planning for these changes now. The law is just around the corner,” she said. “There’s no need to delay; many companies already pay super at the same time as wages.”
The intent behind these changes is to simplify the ATO’s ability to track and recover unpaid super, while also boosting employees’ retirement savings over time.
For example, for a worker aged 25, starting to contribute more frequently could mean an extra $6,000 in their retirement account, adjusted for today’s values. Meanwhile, a 35-year-old with a significant amount owed could see their retirement balance increase by over $30,000.
Rosenzweig noted that the changes would enable the ATO to detect underpayments or non-payments sooner, fostering a more proactive approach. “These are crucial adjustments aimed at tackling the issue of super underpayments and ensuring employees are fully compensated for any delays in their super contributions,” she added.
The ATO reports that around $6.25 billion in super went unpaid in the last financial year.
Employers will have a seven-day window to pay super contributions from the date of wage payments. Missing this deadline could result in needing to remit the current super guarantee fee, including any shortfall amount, daily interest, and an additional fee that could reach up to 60 percent of that shortfall.
Chartered Accountants Australia supports the ATO’s risk-based compliance approach during the initial year but has called for a transitional relief extension until June 30, 2028, to allow businesses ample time to adjust. They also seek clearer definitions of key terms and additional support for employers facing challenges due to mergers or other external factors.
Richard Webb, CPA Australia’s Superannuation Director, stated that while payday super is a beneficial move for workers, the transition process must be fair and manageable for employers. “Adjustments to payroll systems, payment processes, and staff training will be necessary, and it’s important to have clear guidance during this period,” he commented.
Rosenzweig mentioned that the ATO is finalizing its compliance strategy and is collaborating with various industry bodies and service providers to help employers gear up for the changes set to take effect on July 1. Clear guidance on compliance factors will be made available soon.
