Australian employers are set to be charged daily interest on superannuation that is not paid to employees within seven days of their payday, while small businesses will lose access to the Small Business Superannuation Clearing House from July 2026.
On Wednesday, the federal government released further details about its plan to introduce a payday super system, which will require Australian employers to pay their staff superannuation at the same time they pay their wages, instead of quarterly.
The change is due to come into effect on July 1, 2026, if the Labor government successfully passes legislation to change the superannuation payment system.
Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones on Wednesday outlined a plan to update the super guarantee charge (SGC) framework, which they say will compensate employees if their super payments are delayed, give employers incentives to quickly catch up on missed payments, and impose tougher consequences on employers that do the wrong thing.
Under the government’s plan, employers will be held liable for the updated charge if employees don’t receive their superannuation payments within seven days of their payday.
The government says this timeframe will allow for payment processing, as well as “swift action” against employers who are not making payments.
If employers fail to pay in full and on time — within seven days of an employee’s payday — they will be charged interest each day, starting the day after the due date.
According to a fact sheet supplied by the Treasury, this will be based on the general interest charge at the time and charged on a compounding basis. Currently, the general interest charge sits at 11.36%.
Employers may also be required to pay additional administrative charges, while penalties will apply to employers that do not pay super entitlements in full within 28 days of a notice of assessment from the Australian Taxation Office (ATO).
The reforms will also see the government revise the rules around superannuation fund choices, to make it easier for employees to nominate their existing super fund when starting a new job.
The goal is to reduce any unintended duplicate accounts and ensure employers have the correct details to pay their employees’ super.
The ATO will also be given greater visibility over superannuation guarantee payments, with employer Single Touch Payroll (STP) data to be matched against superannuation fund reporting.
Finally, the government intends to “retire” the ATO’s Small Business Superannuation Clearing House from July 1, 2026, given the recent uptake in payroll software solutions that can facilitate payday super arrangements.
“The ATO will engage with small businesses ahead of time to support them in transitioning to an alternative that is fit-for-purpose for payday super,” reads the Treasury fact sheet.
Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones said on Wednesday the reforms will “benefit the retirement of millions of Australians”.
However, business groups have expressed serious concerns about the new arrangements, which they say could add considerably to the compliance burden for small businesses.
In a statement on Wednesday, the Australian Chamber of Commerce and Industry (ACCI) said while it supports payday super in principle, “the policy as it stands will create another layer of red tape for small businesses”.
“We are concerned the government has not given enough consideration to the pressures small businesses are facing right now,” said ACCI chief executive Andrew McKellar.
The Council of Small Business Organisations Australia (COSBOA) also warned small businesses will “bear the brunt” of the increased costs and administration.
“Employers will be required to make up to 13 times as many payments, handle up to 13 times as many transactions, and ultimately incur up to 13 times the cost to ensure super reaches their employees’ accounts under this new arrangement,” said CEO Luke Achterstraat in a statement provided to SmartCompany.
“This is an overwhelming ask, particularly for small businesses already struggling with tight margins.”
COSBOA and ACCI also highlighted the removal of the Small Business Superannuation Clearing House as a particular concern.
COSBOA said the clearing house was previously available as an option for some 250,000 small businesses, allowing them to fulfil their superannuation obligations for employees in one transaction and with no additional costs.
“This closure leaves many small business owners uncertain about how to manage their super obligations going forward,” added COSBOA.
“For those using payroll software with integrated payment services, the new requirements will likely lead to an increase in software costs that businesses cannot easily absorb.
McKellar acknowledged the clearing house may not have been “operating as it should”, but said it remains a “valuable tool for many small businesses who simply do not have the time or resources to process superannuation payments any other way”.
Additionally, COSBOA is concerned the new framework gives super funds and payment gateways the ability to hold onto super contributions for up to seven days for the purpose of earning interest.
“This change appears to overlook the reality of running a small business,” said Achterstraat.
“Not only will employers face increased payroll management costs, but they could also be penalised for delays that are entirely outside of their control.”
COSBOA is calling on the government to reconsider its proposed plan, allow small businesses to pay employee superannuation contributions monthly, and scrap penalties for employers that have processed the super payments at their end.
“It is not the employer’s fault if others in the chain can’t process promptly,” added Achterstraat.
The government said the legislation for payday super will be designed through the remaining months of 2024, before draft legislation is released for consultation.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
Editor
Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
Comments