THE NEW PAYDAY SUPER REFORMS - ARE THEY ANY GOOD?

The new Payday Super reforms - are they any good?

The existing superannuation guarantee compliance regime can operate with dramatic effect – but is common sense prevailing?

The advent of the Government’s new ‘Payday Super’ reform, scheduled to commence from 1 July 2026, has many tax professionals feeling a sense of cautious optimism. Not necessarily because of the synchronisation of pay runs to superannuation payments, a topic of debate among business owners, but because of the evolution of the laws regarding employer non-compliance.

The existing superannuation guarantee charge (SGC) regime can operate rigidly and give rise to large tax liabilities arising from relatively minor non-compliance:

  • Made a payment a few days late? Tough, fill in the SGC statement, claim a late payment offset and pay the interest and penalties.

  • Lodged the SGC statement a little late? The employer’s company directors are now personally liable.

  • Received a penalty? It could be up to 200% of the total theoretical SGC, and it operates as if any late payments were not made at all.

The ATO’s compliance position was tied to the legislation – the Commissioner’s officers could not apply discretions that did not exist in the law.

However, on 9 October, the ATO released its ‘Practical Compliance Guideline’ PCG 2025/D5 outlining its compliance approach for the employers for the first year of the ‘Payday Super’ regime.

Positively, the ATO has identified various ‘green zone’ low risk categories which employers may find themselves in as they, and their payroll software suppliers, adjust to the new regime.

In the green zone includes examples such as where the employers tried to make their on-time contributions by the due dates, but some of the contributions were not received by the relevant fund on time. This may include because the contributions were rejected by the super fund or went to an employee’s prior account. Undoubtedly, the ATO recognises the considerable teething issues which will arise in the early months of the regime.

The ATO appears to be focusing its attention to those employers who:

  • do not synchronise their super payments to the new regime (e.g. they are still paying on a monthly or quarterly basis), which is medium risk; and

  • are potentially experiencing cashflow difficulties or flouting the law, using an example of failing to make payments to their employees for a six-month period, which is high risk.

Whilst the ATO’s proposed application of compliance resources to those failing to adapt to the law changes or disregarding the law entirely is refreshing, the ATO’s approach is limited to the first financial year only. After this period, we may see the ATO revert to a rigid application of the SGC laws. Additionally, those employers with historical issues under the existing regime will remain on the ATO’s radar.

See Link: ATO I Draft Practice Compliance Guidelines PCG 2025/D5 I Legal Database

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Alan Krawitz