Payday Super requires employers to pay employees’ superannuation at the same time they pay their wages. Contributions must reach the employee’s fund within seven business days of payday. This replaces the old system, which only required employers to make super payments quarterly.
For Employees
- Better visibility: You can track your super balance on a regular basis, exactly as you do with your wage, making it easier to monitor your retirement savings.
- Quicker growth: Super arriving closer to your payday means your contributions have more time to accumulate interest and compound.
- Less unpaid super: It drastically reduces the risk of employers missing payments or going out of business before paying out your owed super.
For Employers
- Payment deadlines: Super guarantee (SG) contributions must be processed so the funds land in your employees’ nominated super accounts within seven business days after their regular payday. (For new employees, or those changing funds, you have up to 20 business days).
- Reporting changes: You are required to report both Qualifying Earnings and super liabilities through Single Touch Payroll (STP) each pay cycle.
- Clearing house updates: The ATO’s Small Business Superannuation Clearing House (SBSCH) is closed. You will need to use alternative clearing houses, payroll software, or digital gateways to disburse funds to multiple funds.
- Late or missed payments: Falling behind on this obligation will trigger the Super Guarantee Charge (SGC), which includes daily compounding interest and administrative penalties.
Transition and Next Steps
To prepare and ensure compliance, employers should take action with the following tools and resources:
- Payroll Software: Update your payroll system and contact your payroll provider (such as Xero or similar STP-enabled systems) to ensure it is configured to process and report super per pay cycle.
- Review ATO Directives: Consult the Australian Taxation Office Payday Super Guide for step-by-step information on calculating qualifying earnings, managing the changeover, and avoiding penalties.
- Consult CMA: If you handle your payroll manually or use CMA as your accountants, reach out to our office to establish a compliant pay-run schedule.
