Payday super will hit employer cashflow management

Mike Taylor

Managing Editor/Publisher, Financial Newswire

3 May 2023

The Federal Government has delivered what industry superannuation funds have been demanding for decades – pay day superannuation.

The measure, to be introduced from 1 July, 2026, will see employers required to adjust from the current quarterly superannuation guarantee cycle to monthly and, in some cases weekly payments.

Ironically, the payday cycle was originally canvassed when the superannuation guarantee regime was originally introduced in 1992 but the Government of the day opted, instead, for the quarterly cycle.

The measure is expected to place increased cash-flow pressure on businesses, particularly some small to medium enterprises with employers having told a Parliamentary inquiry in 2017 that “small business cash flow is a major contributor to missed payments”.

“Cash flow is an endemic problem for many, if not most, small and micro businesses,” the Australian Chamber of Commerce and Industry (ACCI) said.

That same inquiry, undertaken by the Senate Economics Committee, actually recommended the implementation of a monthly rather than quarterly superannuation guarantee payment cycle.

The Government’s move comes against the background of Industry Super Australia (ISA) in February last year declaring that the Australian Taxation Office (ATO) was fighting a losing battle against addressing the $5 billion a year in unpaid superannuation guarantee.

In doing so, it said that the Tax Commissioner, Chris Jordan had told a Senate inquiry that “loose laws that allows super to be paid only four times a year was making enforcement harder for the regulator”.

The Assistant Treasurer and Minister for Financial Services, Stephen Jones yesterday formally confirmed what the Government had been flagging for weeks – that payday superannuation would be announced in next week’s Federal Budget for implementation in 2026.

The Government’s time-table for the change is aimed at allowing time for the ATO to build up the necessary resourcing for the measure and to develop and implement technology and regulatory changes.

Jones said that the ATO would be receiving additional resourcing to help detect unpaid superannuation payments earlier and the Government would be setting enhanced targfets for the ATO for recovery payments.

The Government’s announcement came shortly after the Australian National Audit Office (ANAO) confirmed that the ATO had been falling short on addressing superannuation guarantee non-payment.

Jones said that the start date would also provide employers, superannuation funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change.

ISA last year argued that federal politicians had known of the payday superannuation answer to SG non-payment for years but had failed to act.