The Government announced further policy design details on the Payday Super measures scheduled to be effective from 1 July 2026 (see our earlier article) contained in a four page fact sheet.
The proposed model, as outlined in the fact sheet, includes:
Super guarantee will continue to be based on ordinary times earning (OTE) – ie excluding overtime etc
Contributions must arrive to the employee’s super fund within 7 calendar days (this is discussed further below)
There will be 2 limited exceptions to the 7 day rule – first, for new employees the timeframe will be 14 days after they commenced employment and, second, contributions in relation to small and irregular payments can be made within 7 days of the next regular OTE payment
The super guarantee charge will continue to apply for late payments
Changes to the super guarantee charge calculation include – it will be based on OTE (not salary and wages), the notional earnings will equal the general interest charge or GIC (not a flat 10%) and the administrative charge will be a percentage uplift of up to 60% (not a dollar charge per employee per quarter)
In addition, the super guarantee charge will be deductible (currently not)
GIC will apply on late super guarantee charge amounts excluding the admin charge
Super guarantee charge penalty will be up to 50% (currently up to 200%)
The late super contribution regime will be simplified such that late contributions will count towards the earliest possible payday that has not been assessed for the super guarantee charge
Other changes include – the time frame for allocating contributions by super funds will be reduced from 20 to 3 days and the ATO’s small business superannuation clearing house will be retired from 1 July 2026
One of the major concerns for employers will be the retention of the “contribution receipt” model rather than moving to a “payment made” model. Under the receipt model, a payment could be made by the employer but not received by the super fund within 7 days. This could be because of delays by banks or clearing houses or rejections by clearing houses or the super fund. For example, see our article on payment timeframes in Neal v Brown (one payment took two weeks).
Although, this could be mitigated by the reduction in penalties and the deductibility of the super guarantee charge. Additionally, regular payments, and supervision by the ATO, should result in underpayments being picked up more regularly (therefore, reducing the “notional earnings” amount of the charge.
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
Terence Wong
Senior Associate
T +61 3 9611 0112 l M +61 0458 846 022
E twong@sladen.com.au
