Staged implementation out to 2027 urged on pay day super

The Superannuation Guarantee Charge (SGC) model in its current form is overly complex and punitive and needs to change ahead of the Government implementing pay day super (PDS), according to a major accounting group.

As well, the Government needs to consider using the Budget to take a phased approach to the implementation of PDS similar to the approach it took to the implementation of single touch payroll (STP), the Institute of Public Accountants (IPA) said.

It said the design of the SGC and the associated penalties “deter self-rectification” and therefore operate as a disincentive for employers to voluntarily report and rectify historical shortfalls.

“One of our key concerns is the draconian application of penalties that do not proportionately reflect the loss to employers or the ‘culpability’ of an employer who is in arrears,” the IPA submission said.

Dealing with the implementation of the new PDS regime, the IPA said that the compliance and cashflow impacts on small and medium businesses warranted consideration of a staggered implementation time table similar to that used with the introduction of single touch payroll.

“The implications on small and medium business entities are not insignificant moving to a PDS model for SG contributions,” it said.

“An extended timeframe also provides more time for unforeseen issues to be ironed out prior to implementation for all other employers.”

“Similar to the staged STP implementation, the ATO could require compliance with the new SG payment timeframes from 1 July 2026 for those employers with at least 20 employees immediately before 1 July 2026.

“All other employers could be required to comply 12 months later; that is, from 1 July 2027. Also, as with STP, a very small number of (mostly) micro-employers may not be able to comply with any new SG payment requirements, be impacted by exceptional or unforeseen circumstances as outlined in PS LA 2011/15 or run their business in an area with no internet service. In these cases, the ATO should be able to administratively exempt these employers, on a case-by-case basis.”