Superannuation goes unpaid each year in Australia (an estimated $5.2 billion!). That’s exactly what the Government is aiming to address with the introduction of Payday Super.
Payday Super is now officially in place, one of the biggest changes to employer super obligations in recent years. We’ve been talking to clients about this for months, and payroll software providers are already rolling out updates to support it. If you haven’t reviewed your processes yet, now’s the time.
Our advice: don’t assume a soft landing. Between how the ATO has handled similar reforms before and the volume of updates we’re seeing roll out across accounting software, we don’t expect a long transition period or much leniency once the rules bed in. Employers who wait to “sort it out later” are the ones most likely to get caught out.
A quick overview of what’s changed
Until now, employers have generally paid super quarterly. Now super needs to be paid at the same time as wages, with contributions reaching an employee’s nominated super fund within 7 business days of payday.
These changes haven’t been introduced to create more paperwork for businesses. They’re designed to make sure employees receive the super they’re entitled to. The reforms also give the ATO greater visibility over whether employers are meeting their obligations, making timely compliance more important than ever.
Is your business ready?
Payday Super is a good excuse to check a few things:
- Payroll software: most providers have already released updates. If you’re not sure yours is set up correctly, check now.
- Onboarding: every new employee should complete a Super Choice Form. No nomination means paying into your default fund.
- Cash flow: paying super every cycle instead of quarterly can hit cash flow harder than expected.
- Timeframes: it’s not enough to process the payment; it has to land in the fund within the window. Leave it too late and processing delays put you offside.
Don’t wait until there’s a problem
The ATO has encouraged employers to review their payroll systems, software and business processes to ensure they’re meeting the new requirements. If you haven’t done that yet, it should be a priority.
If you’re unsure whether your business meets the new requirements, or just want peace of mind that your payroll processes are set up correctly, get in touch with the Verliyah Chartered Accountants’ team.