Bear in mind the Superannuation Guarantee (SG) rate increases to 12% on 1 July 2025.

Under the new legislation, superannuation contributions must be deposited into Superannuation Funds within 7 days of the payday. Considering the time required for bank transfers and clearing processes, employers will face a tight turnaround to meet the new requirements.

There are a few exceptions to this rule:

• Contributions for ordinary time earnings (OTE) paid during the first 2 weeks of a new employee’s tenure can be deferred until after that initial period.
• Small and irregular payments made outside the employee’s regular pay cycle will not count as a payday until the next scheduled OTE payment or ‘payday’ occurs.

Changes to the Superannuation Guarantee charge

With increased visibility from the ATO and heightened opportunities for employees to detect and report unpaid superannuation, enforcement against unpaid contributions will become more rigorous. Notably, the new legislation classifies unpaid superannuation as a form of theft, marking a significant shift in accountability.

When employers fail to pay contributions in full and on time, they become liable for the Superannuation Guarantee (SG) charge. This charge is being updated to align with the Payday Super framework and will reflect the seriousness of underpayment and late payments of the SG.

The updated SG charge is designed to ensure that employees receive full compensation for any delays in their superannuation contributions while providing an incentive for employers to address unpaid superannuation quickly.

The updated SG charge framework will:

• Put workers in the same position as if the contributions had been received in full and on time.
• Incentivise employers to quickly disclose and rectify any instances of unpaid superannuation.
• Scale up consequences for employers who don’t pay on time, with bigger penalties for employers who repeatedly do the wrong thing.

Once Payday Super is implemented, the SG charge will be tax-deductible, ensuring the income tax consequences for paying employees’ superannuation are consistent. Any penalties and interest after assessment of the SG charge by the ATO will not be deductible.

What do you need to do?

• Ensure Accurate Superannuation Accounts
  Start by ensuring your employees’ superannuation accounts are up to date. Make sure you have the correct details and are using an approved Superannuation Clearing House. *See below for more information.
• Review Onboarding Procedures
  Review your onboarding procedures to ensure compliance. Confirm you have a suitable default fund in place and you are checking for the existence of any stapled funds.
• Transition to Monthly Payments
  If you are paying superannuation quarterly, our advice is to stop now. The risks associated with delayed payments are significant, so switch to monthly contributions instead.
• Evaluate Payroll Processes
  If you are paying wages weekly or fortnightly, now is the time to review your payroll processes. Consider changing to monthly payrolls, as the administrative burden of paying superannuation more frequently will add to your hidden payroll costs.
• Consider Outsourcing Payroll
  Due to the increased compliance requirements, you might want to think about outsourcing your payroll to streamline processes and reduce administrative overhead.

Important: Closure of the Small Business Superannuation Clearing House*

The Small Business Superannuation Clearing House is set to close, and by the time Payday Super is introduced. This free Government service will be de-commissioned (for more information, visit ato.gov.au). This change affects the 270,000+ small business employers who currently rely on this service to manage their superannuation contributions.

If you need to find a new Clearing House, we recommend not choosing the cheapest option. Instead, look for a Clearing House that integrates with your payroll systems, ensuring efficiency.

Disclaimer: This is not advice. You should not act solely on the basis of the material contained in this post. These are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.

We’re ready to help. If have any questions about superannuation please contact our team on +61 3 9820 6400.

Disclaimer: This is not advice. You should not act solely on the basis of the material contained in this post. These are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.