Introductory Info
Date of introduction: 9 October 2025
House introduced in: House of Representatives
Portfolio: Treasury
Commencement: 1 July 2026 (for both Bills)
Purpose of the Bills
The purpose of the Treasury Laws Amendment (Payday Superannuation) Bill 2025 (Main Bill) and the Superannuation Guarantee Charge Amendment Bill 2025 (SGC Bill) is to amend the superannuation guarantee legislation and various other related Acts. The Government intends that implementing Payday Super will eliminate the problem of unpaid super by making sure ‘superannuation is paid on time’.
Key changes proposed by the Bills
According to the ATO, the key changes that the Bills will introduce from 1 July 2026 include:
- …employers will be required to pay their employees’ SG at the same time as their salary and wages. They will be liable for the superannuation guarantee charge (SGC) unless contributions are received by their employees’ superannuation fund within the required timeframe, generally 7 business days after payday.
- Payday is the date that an employer makes a qualifying earnings (QE) payment to an employee.
- Contributions will generally need to arrive in employees’ superannuation funds within 7 business days of payments of QE. QE is a new concept which includes:
- ordinary time earnings (OTE)
- salary sacrifice superannuation contributions
- other amounts which are currently included in an employee's salary or wages for SG
- An extended timeframe to pay contributions will apply in certain circumstances [for examples, paying SG for new employees or exceptional circumstances such as natural disasters].
- …Where employers fail to pay contributions in full and on time, they are liable for SGC. The SGC will be updated and consist of:
- Individual final SG shortfall…
- Notional earnings…
- Administrative uplift…
- Choice loading…
- Once SGC is assessed, additional interest and penalties may apply if the SGC liability is not paid in full...
- General interest charge (GIC)…
- Late payment penalty…
- The SGC will be tax-deductible…
- The late payment offset will no longer apply to amounts contributed after 1 July 2026.
- …The Small Business Superannuation Clearing House will be retired from 1 July 2026 and closed to new users from 1 October 2025.
Background
Under the Superannuation Guarantee (SG), employers are required to pay superannuation contributions for each eligible employee. The minimum SG is calculated as a percentage of each eligible employee’s ordinary time earnings. The current SG percentage is 12%. Employers are required to pay the Super Guarantee Charge (SGC) when they don’t pay the minimum amount of SG for their eligible employees to the correct fund by the due date. The SGC comprises:
- the SG shortfall, which is:
- SG calculated on salary and wages (including any overtime) and
- any choice liability, capped at $500
- nominal interest of 10% per annum and
- an administration fee of $20 per employee, per quarter.
The problem
Unpaid superannuation can reduce employees’ retirement incomes, delay retirement, and give non-compliant employers an unfair competitive advantage.
According to the latest ATO analysis (published 1 November 2024), the ‘SG gap’ between the total amount of SG the employers would have paid if they were fully compliant and that employers have actually paid to employees was $5.2 billion or 6.3% in 2021–22. In 2024, the Australian National Audit Office (ANAO) reported (p. 33) that the ATO’s analysis of ATO and third-party data indicated that SG non-compliance is ‘unevenly spread across employers, with prevalence greater for small and micro businesses and certain industries’.
Superannuation entitlements and insolvency
In many cases employee entitlements are lost when a business becomes insolvent. In a 2018 paper, law academics Helen Anderson and Tess Hardy noted:
… the corporate form can be used to take business risks, often funded by debt. These risks expose creditors to the possibility of loss but allow the owners of the company to benefit if the entrepreneurial gamble pays off. Not surprisingly, unpaid employee entitlements and superannuation are often casualties of excessively risky, or even deliberate, behaviour that sees a company become insolvent (p. 515).
There are differing opinions about how to set rules for how frequently employers are required to make contributions to their employees’ superannuation.
One view emphasises the value of flexibility for employers. The shorter the time between payments, the less ability the employer has to use the funds to deal with cash flow problems and, potentially, stave off insolvency. In a submission to the 2025 Treasury consultation on exposure draft legislation for Payday Super, MYOB suggested that close to a quarter of businesses could be at risk of insolvency if they were required to pay superannuation at the same time as pay (the submission suggests that some employers will respond by moving to longer pay cycles) (p. 8). Similarly, a submission by Employment Hero argues that the Payday Super changes risk ‘pushing thousands of [small and medium-sized businesses] to the brink of insolvency and triggering widespread job losses’, in part due to ‘tightened cash flow cycles’ (pp. 2 & 13).
An alternative view is that superannuation contributions are deferred wages and businesses trading close to insolvency should not rely on them to deal with cash flow problems. A 2017 inquiry report by the Senate Economics Committee stated that ‘the committee is strongly of the view that employees' SG entitlements should not be used as a cash flow tool, particularly without their knowledge or consent’ (p. 48).
Detecting unpaid superannuation
As Treasury's 2023 Impact Analysis of the Payday Super reforms explains, employers currently have 28 days after the end of quarter for money to be received in an employee’s superannuation account (p. 13). The longer it takes employees to detect unpaid superannuation contributions and report it to the ATO or take action under the Fair Work Act, the greater their foregone investment earnings and the greater the risk that the employer will have become insolvent. Treasury further explained that it is also difficult for the ATO to identify and recover unpaid SG before an employer becomes insolvent due to the length of time it takes for incidents to be identified (p. 13).
The 2023-24 Budget (pp. 26–27) included $40.2 million funding to enable the ATO to improve its ability to use data matching to detect and act on underpayments by employers and for consultation and co-design.
Debate over frequency of contributions
Over the past two decades various reviews and reports have examined the problem of unpaid SG, and a number of governmental actions have been taken in that time (pp. 118–131). Despite these efforts, a 2022 ANAO performance audit found that the ATO’s activities in addressing SG non-compliance were only partly effective (p. 7).
Since 2002, superannuation has been paid quarterly. In 2017, a Senate Economics References Committee inquiry recommended the Government ‘strongly consider’ amending legislation ‘to require SG to be paid at least monthly, and preferably in alignment with regular pay cycles’ (p. 40). In a dissenting report, the Deputy Chair of the Committee, Senator Jane Hume, argued that this recommendation was beyond the scope of the inquiry’s terms of reference (p. 98).
In 2020, the Treasury’s Retirement Income Review noted (p. 304) that ‘since the SG is not required to be paid at the same time as wages, employees may find it difficult to monitor if they are being paid the SG to which they are entitled.’
In March 2022, a Senate Economics References Committee inquiry into unlawful non‑payment or underpayment of employees’ remuneration recommended that the Government consider legislation to require that SG payments are aligned with the payment of wages (see Recommendation 9, p. x). In April 2023, after the change of Government in May 2022, the Albanese Government accepted this recommendation in-principle (p.8). However, in a dissenting report (March 2022), the Senate Coalition committee members had noted that the ‘current payment frequency of superannuation seeks to strike a balance between ensuring the timely payment of superannuation and the burden on business, particularly small businesses’ (p. 151).
The Government’s proposed solution
On 2 May 2023 the Government announced that, from 1 July 2026, it would require employers to pay employees’ superannuation at the same time as their wages and salary. In addition:
To further strengthen the system, the ATO will receive additional resourcing to help it detect unpaid super payments earlier and the Government will set enhanced targets for the ATO for the recovery of payments.
Treasury released an impact analysis on 8 May 2023. (The impact analysis is reproduced at Attachment 1 of the Explanatory Memorandum, pp. 65–131). On 9 May 2023, the Government announced the Payday Super measures in the ‘Securing Australians’ Superannuation package’ in the Budget 2023–24 (pp. 26–27).
Between 9 October and 3 November 2023, the Treasury conducted the Securing Australians' superannuation consultation on Payday Super. Treasury received 95 submissions, including 9 confidential submissions, on the consultation paper.
On 14 May 2024, the Government announced in the Budget 2024–25 that $60 million to be provided over 4 years to increase the Productivity, Education and Training Fund (part of the Government’s workplace relations agenda), will also support ‘workplaces to implement policy changes such as the introduction of payday superannuation’ (pp. 95–96).
On 18 September 2024, the Treasury published the Payday Super fact sheet and the Treasurer and former Assistant Treasurer released a joint media statement.
Between 14 March and 11 April 2025, the Treasury published the consultation paper outcomes, and launched consultation on exposure draft legislation for:
- core provisions, imposition Bill amendments, and explanatory materials (which are related to the current Bills) and
- advertising ban, onboarding reforms, regulations and explanatory statement (which are not included in the current Bills).
Treasury received 139 submissions.
From draft legislation to the Bills
A Thomson Reuters’ Weekly Tax Bulletin article summarises the differences between the draft legislation and the current Bills (note, closure of ATO approved clearing house is part of the current Bills (paragraph 1.131):
The following items covered in the draft exposure legislation were not included in the 2 new bills introduced to Parliament:
- tighter timeframes for super funds handling employer contributions;
- ban on advertising super funds during onboarding; and
- employee onboarding reforms.
The most substantive differences in the [Main] Bill compared to the March exposure draft include:
- a shift from calendar days to business days for contribution timeframes;
- 20 business days to contribute to funds for new employees (rather than 21 calendar days) and expansion of this additional time to apply to contributions to new funds of existing employees;
- a penalty assessment is reduced to nil if an exceptional circumstances determination covers the employer for any part of the relevant period, even if made after the period; and
- detailed transitional rules, including the prevention of late payment offsets after commencement. The explanatory memorandum provides detailed examples showing how contributions made before commencement apply under old law first, then carry forward to new law. The late payment offset will only apply to contributions made before 1 July 2026.
Policy position of non-government parties and independents
The former Shadow Minister for Financial Services, Luke Howarth was reported in the Australian on 25 February 2025 as saying: ‘while the Coalition would consider Labor’s payday super legislation once it was finalised, small businesses were “already doing it tough under the Albanese government” and 27,000 had gone bust this term... “(Small businesses) will face liquidity and cashflow challenges arising from more frequent super guarantee payments...”’
In additional comments in the Senate Standing Committees on Economics June 2018 report on the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018, Australian Greens Senator Whish-Wilson recommended: ‘That legislative changes be made to require superannuation to be paid in alignment with regular pay cycles, or on a monthly basis, whichever is the lesser period.’
In October 2023, the Guardian reported that Senator David Pocock was urging the Government to progress payday super.
The position of other non-government parties and independents is not known at the time of writing this Bills Digest.
Position of major interest groups
Following the introduction of the Bills on 9 October 2025, several stakeholders issued media releases. The Association of Superannuation Funds of Australia (ASFA), the Australian Council of Trade Unions (ACTU), the Australian Retirement Trust (ART), Cbus Super (CBUS), the Council on the Ageing (COTA), MYOB, the Financial Services Council (FSC), Rest (Retail Employees Superannuation) and the Super Members Council (SMC) welcomed the introduction of the Bill.
Super Consumers Australia (SCA) welcomed the Bill but was concerned that the previously proposed consumer protections on super fund advertising during employee onboarding had been removed from the Bill.
The Australian Chamber of Commerce and Industry (ACCI) was supportive of the concept of Payday Super in principle but expressed concern over the increased administrative burden on businesses, especially small businesses whose business processes (e.g. payroll system and software) are not ready for the changes. ACCI’s CEO Andrew McKellar was concerned that the closure of the ATO Small Business Superannuation Clearing House scheme would only add to this burden. Mr McKellar mentioned that in a recent ACCI survey, “over 40 per cent of small businesses were not even aware of the forthcoming changes to their superannuation requirements.”
CPA Australia supported Payday Super but considered that ‘concerns remain over how the new regime will work in practice, as well as the impact it will have on small business’. CPA warns that the potential for unintended consequences is high, particularly stress on small business cashflow and the impact of penalties for mistakes during the transition. In addition to concerns that the superannuation transmission network may not be ready to manage the increased traffic by July 2026, CPA believes that many employers will need time to understand the new rules and adjust their payroll processes to comply on time.
On 10 October 2025, Grant Thornton (an international accounting firm) commented that the ATO’s Draft PCG 2025/D5 (which outlines the ATO’s compliance approach for the first year of implementation of Payday Super) ‘acknowledges industry concerns that employers may not have sufficient time to deploy, test and embed changes before commencement. This recognition is important, but the timeline remains tight and key difficulties raised during the consultation process remain unaddressed in the new law.’
Financial implications
The Explanatory Memorandum (p. 1) provides that the Bills are estimated to increase revenue by $589 million over the 3 years starting from 2026–27.
2026–27
($ million)
| 2027–28
($million)
| 2028–29
($million)
|
|---|
1,405
| -929
| 113
|
Key issues and provisions
Key issue: Start date of Bills
The proposed date of commencement of the Bills is 1 July 2026 (clause 2 of both Bills).
Several submissions to Treasury on the Payday Super exposure draft legislation by professional bodies and software providers argued that the start date is unfeasible and provides insufficient time for implementation. The ‘Joint Professional Bodies’ (‘Joint Bodies’)[1] (pp. 4, 9–10) argued the start date was unrealistic, recommending a 12–24 month delay and a tiered implementation (larger employers first). Australian Industry (Ai) Group (p. 3) argued for a minimum of 12 months, and ideally 18 to 24 months, between passage and commencement. The FSC (p. 2) wanted to change the start date to two years from passage. ACCI (p. 4) recommended the start date be delayed for an additional 12 months, to 1 July 2027. The Association of Digital Service Providers Australia and New Zealand (DSPANZ) (p. 3) recommended a commencement date of 1 July 2028, to provide sufficient time to develop, implement and test the required changes. Xero (p. 6) called for a 21–24 month period before commencement.
COSBOA said there needed to be a phased implementation, moving firstly to monthly payments by 1 July 2026 before the full Payday Super was implemented no earlier than 1 July 2030.
The ASFA (pp. 3–4) and AustralianSuper (p. 2) supported the 1 July 2026 start date but called for transitional arrangements and a facilitative compliance approach by the ATO.
Draft Practical Compliance Guideline
In response to concerns about the start date, the ATO is consulting on its Draft Practical Compliance Guideline PCG 2025/D5 until 7 November 2025. The Draft Guideline sets out the factors the ATO will consider when deciding how to apply compliance resources to investigate employers, according to low-risk, medium‑risk, and high-risk categories of employers.
However, accounting firm BDO Australia (BDO) commented that the draft PCG ‘does not provide sufficient relief’ in circumstances where employers become non-compliant due to insufficient lead time to deploy, test and embed changes within their systems and processes:
The low-risk examples [in the Draft Guideline] represent extremely limited circumstances, which relate to rejected contributions and employee super fund mergers only. Further, the medium risk zone states that compliance resources 'may be' applied, which creates uncertainty for the assessment of this risk by employers.
Key issue: Compliance burden
As mentioned earlier and in the Explanatory Memorandum (pp. 68, 108–110, 112), many stakeholders have expressed their public support in-principle for the Payday Super measures during previous consultations. For example, Maurice Blackburn Lawyers considers that Payday Super will ’benefit all Australians, in particular women’ and ‘further protects our insurance benefits in our super funds’.
However, several professional bodies raised concerns about the compliance burden imposed by the Bills, with the Ai Group (pp. 3–4) proposing an alternative model based on a one-month cycle rather than quarterly, noting problems with increased compliance costs and ‘employers not controlling all the variables and contingencies that will govern their compliance’. The Business Council of Australia (BCA) (p. 1) supported the intent of the reforms and suggested amending some provisions that it considered unfairly burdened employers, e.g. to provide a separate time frame (of at least 10 business days) for employers to rectify payments made but rejected by a fund.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) (p. 4) pointed out that payroll processes are complex and susceptible to human error. It considered that employers would be heavily penalised for errors which are either unintentional or committed by others in the payment chain. MYOB also warns that the Bills ‘could strain cashflow if not planned for. Non-compliance triggers costly ATO penalties’.
The Impact Analysis accompanying the Bills does not quantify employers’ compliance costs.
7 business day contribution timeframe
At present, SG contributions are due 28 days after the end of the relevant quarter.
Under items 10 and 12 of the Main Bill (proposed subsection 6(1) and subparagraph 18C(1)(c)(i) of the Superannuation Guarantee (Administration) Act 1992 (SGA Act)), to avoid incurring a shortfall amount, employers must ensure superannuation contributions reach employees' funds within 7 business days of the QE day (payday), or the ‘usual period’. The accounting firm Grant Thornton described this as ‘a tight time frame’. BDO commented: ‘[the usual period] falls short in providing a fair system for employers doing the right thing. This is because employers may still be non-compliant for issues arising out of their control caused by delays in the processing of the contributions’.
The Joint Bodies (p. 7) recommended the window for SG contributions to be processed and received by superannuation funds be extended to 10 business days. ASBFEO (p. 8) recommended 21 business days.
Queensland Treasury (p. 2) suggested that, to deal with payments in advance and arrears, the QE day should be:
- where wages and salaries are paid within a regular scheduled pay period for that pay period, the day at the end of the employer’s regular, scheduled pay period and
- where wages and salaries are paid in arrears of a regular scheduled pay period, the day salaries are paid.
Queensland Treasury (pp. 1–2) was concerned about the time needed for reprocessing returned super contributions, and suggested a 21-day timeframe.
When SG contributions are considered made
The Main Bill adopts a ‘due date’ (receipt-based) model, meaning that the contributions are considered made when they are received by the employee’s super fund and are capable of allocation within the usual period (item 12, proposed subsection 18A(1) of the SGA Act). BDO commented that ‘This is a change to the existing law, where it is interpreted that the contributions are only made in time if they are allocated to the member's super fund account’.
Several submissions by employer groups, professional bodies and software providers supported the alternative 'pay date' (payment-based) model for SG contributions, that is, contributions are considered made when either the contribution clears the employer's bank account, or it is received by the super clearing house within the usual period. (See comments from Institute of Financial Professionals Australia (IFPA) (p. 1), ACCI (p. 3), Ai Group (p. 7), the FSC (p. 4), the Joint Bodies (p. 29), MYOB (p. 7) and BDO). IFPA (p. 2) submitted that a receipt‑based model creates unnecessary compliance risk for employers, who may be penalised for delays outside their control. ANZ (p.1) suggested the method for determining when the superannuation contribution is paid should be when the employer loads the contribution into SuperStream.
On the other hand, SMC (p. 5) and ASFA (p. 6) supported the receipt-based model. ASFA saw drawbacks to the pay date model, including that there is no incentive for an employer to correct any incorrect/incomplete data. It can be argued that employees should be protected by ensuring contributions are actually received by their super fund.
Superannuation clearing houses
A superannuation clearing house simplifies the process for employers to make superannuation contributions for their employees. As explained by Australian Super:
Instead of making separate payments to multiple super funds, employers can make a single payment to the clearing house, which then distributes the contributions to the respective employees’ super account.
The ATO currently offers the Small Business Superannuation Clearing House (SBSCH), which provides clearing house services for businesses that have either 19 or fewer employees or annual aggregated turnover of less than $10 million. The SBSCH is the only approved clearing house. As set out in the EM to the Bill:
Under the payday SG framework, there will no longer be provisions relating to approved clearing houses. Currently, the only approved clearing house is the Australian Taxation Office, which has operated a clearing house for small business employers. This clearing house is being retired from 1 July 2026, as it will not be fit-for-purpose for payday superannuation. Therefore, references to approved clearing houses are repealed (p. 45).
IFPA (p.2) and FSC (pp. 2 and 6) suggested regulation of clearing houses so they are obliged to remit SG on time. Instead, as set out above, the Main Bill repeals references to ‘approved clearing houses’, of which currently only one exists—the SBSCH run by the ATO (items 48 and 64, proposed repeals of existing subsection 32C(2B) and section 79A of SGA Act). According to Grant Thornton, this creates uncertainty for businesses that rely on these services for compliance.
Key issue: Additional time for new employees and exceptional circumstances
The Main Bill provides a series of ‘exceptions’ to the 7 business days requirement for contributions, including:
- under items 5 and 12 (proposed definition of ‘extended usual period’ inserted in subsection 6(1) and proposed subsection 18C(2), table item 1), employers will generally have 20 business days from the QE day (the ‘extended usual period’) to make SG contributions for new employees to accommodate the additional time it may take for onboarding
- under item 12 (proposed subsection 18C(2), table item 3 and proposed subsection 18C(4)), the Commissioner may determine, by legislative instrument, one or more kinds of employers who are affected by exceptional circumstances prescribed in the regulations (such as natural disasters or widespread ICT or communications outages, EM, p. 27) for a stipulated period. If covered by such a determination, an employer will have an extended period to make the eligible contribution.
Ai Group (p. 18) recommended: ‘A one month or 31-day approach would seem to provide more scope in practice for issue identification and resolution.’
The Joint Bodies (p. 28) argued that employers should not be penalised where delays in superannuation payments are caused by factors outside their control, such as clearing house processing times, banking system outages, natural disasters or cyber incidents. ACCI (p. 3) commented that, if a payment is delayed due to an event not prescribed in the regulation, such as a cyberattack on one of the clearing houses, then the Commissioner may not be able to grant an extension of time.
Key issue: Changes to superannuation guarantee charge
Qualifying earnings (QE) and QE day
Currently, ordinary time earnings (OTE) are used to work out the minimum SG contribution. An employee's salary or wages may include amounts that are not OTE, such as overtime payments. The SG charge is calculated using salary and wages.
‘Qualifying earnings’ (QE) and QE day are two new important concepts which are used to calculate both SG contributions and the SG charges. QE is defined at item proposed section 10A. QE includes:
- OTE
- salary sacrifice superannuation contributions and
- other amounts which are currently included in an employee's salary or wages for SG.
The same exclusions apply as currently, such as for a payment in lieu of unused sick leave, any unused annual leave or long service leave, and exclusions set out in regulations (EM, p.12))
The term ‘salary or wages’ will be removed from the SGA Act and other Acts (see for example, item 26 of Schedule 1 of the Main Bill, EM, p. 44).
The term ‘QE day’ is introduced under item 12, proposed section 17A: it is the day on which employers pay qualifying earnings.
BDO welcomes that the SG charge is based on the qualifying earnings, rather than on salary or wages as currently required.
Components of the new SG charge
Currently the SG charge comprises the total of an employer's:
- SG shortfalls for the quarter;
- nominal interest of 10% pa; and
- an administration component of $20 per employee for whom there is an SG shortfall.
Under item 12 of Schedule 1 to Main Bill (proposed sections 16, 16A,16B of the SGA Act) and item 1 of Schedule 1 to the SGC Bill (proposed sections 5 and 6 of the SGA Act), an employer’s SG shortfall will comprise the following components:
- the total of their individual final SG shortfalls for the QE day
- the sum of all individual notional earnings components for the QE day
- any administrative uplift amount for the QE day, and
- the total of the employer’s choice loadings for the QE day (if any).
Individual base SG shortfall and individual final SG shortfall
The new concepts of ‘individual base SG shortfall’ and ‘individual final SG shortfall’ are introduced under item 12, sections 18C and 18D. An ‘individual base SG shortfall’ arises for an employer if contributions for an employee made on time within the usual period are less than the minimum required individual SG amount for a QE day, or no contributions are made on time (proposed section 18C).
However, any SG contributions made after the usual or extended periods but before the ATO makes an SG assessment for the day are ‘late contributions’. Under item 12, proposed section 18D, an employer can reduce their ‘individual final SG shortfall’ by making late contributions. Thus, according to the ATO, the individual final SG shortfall is any contributions that remain unpaid when the SG contribution is assessed.
The Explanatory Memorandum (at para 1.70) states:
In the payday SG framework, the employer is no longer required to elect or notify the Commissioner for a late contribution to offset the employer’s SG shortfall. Instead, eligible contributions made during the late period for the QE day will be applied automatically (in the order they are received by the fund) to reduce the SG shortfall in the calculation of the individual final SG shortfall.
Deductibility of late contributions and SG charge
Currently, only on-time contributions are deductible. Late SG contribution and SG charge are not deductible under section 290-95 of the Income Tax Assessment Act 1997. Item 92 of Schedule 1 to the Main Bill would repeal section 290-95, and late SG payments and SG charge would become tax-deductible, but any applicable general interest charge (GIC) or late payment penalty related to SG charge would not be tax deductible (EM, p. 47).
Notional earnings component
Under item 12, proposed section 19A of the SGA Act, notional earnings is a daily interest component, similar to the current nominal interest component, to incentivise employers to pay SG contributions on time and to compensate employees for the days the payment was late. This involves multiplying the individual base SG shortfall amount for the employee by the GIC rate (for October-December 2025 the GIC is 10.61%, or a daily rate of 0.029%). The notional earnings component will apply on a compounding, daily basis and will accrue until a late contribution is made to reduce an employer’s final SG shortfall to zero, or otherwise until the day the ATO makes an SG charge assessment.
One of the key data points required to calculate the SG charge is the date that SG contributions are received by the employee's fund. However, in many cases this data may not be readily available to the employer and the employer may instead provide the date that they paid the contribution if they make a voluntary disclosure statement, which is a new approved form (under item 14, proposed section 33). Accordingly, the Bills provide for a deemed date to be used for when the SG contribution is received, for the purposes of calculating the notional earnings component of the SG shortfall. This deemed date will be 7 business days from the payment day for the eligible contribution (under items 14 and 15, proposed subsections 33(3) and 36(3)).
Choice loading
As with the current law, a ‘choice loading’ will apply and increases an employer’s SG shortfall where an employer does not comply with the choice of fund rules. Under item 12, proposed subsections 16B(2) and 20A(1), the choice loading will continue to apply and would be 25% of the value of SG contributions for any QE day where the employer has not complied. Also, the choice loading limit would be increased from $500 to $1,200 per notice period.
Administrative uplift
The administrative uplift (currently $20 per employee per quarter) is designed to reflect the cost of enforcement and encourage voluntary disclosures. PwC commented that the Main Bill provides a significantly different model (item 12, proposed section 19B). The proposed model starts with an uplift of 60% of the sum of the final SG shortfalls and individual notional earnings components for the QE day. However, the administrative uplift may be reduced using a method prescribed in regulations. An exposure draft of the regulations has been released, which proposes to provide for the ‘administrative uplift to be reduced where certain voluntary steps have been taken by an employer’. The reduction would reflect that the relevant steps ‘would reduce the administrative burden on the ATO in enforcing the assessment and payment of SG charge’.
One circumstance in which the administrative uplift amount will be reduced is where no Commissioner-initiated assessment has been made for the employer during the 24-month period ending on the QE day. As set out in the Explanatory Statement (ES) for the exposure draft regulations, ‘[i]f this criterion is satisfied, the administrative uplift amount will be reduced by 20 percentage points from 60% to 40%’. Proposed subsection 13C(3) of the exposure draft regulations defines Commissioner-initiated assessment as an assessment under proposed subsection 36(1) of the SGC Act (at item 15 of Schedule 1 to the Main Bill) of an employer’s SG shortfall and SGC payable on the shortfall, that was made on the Commissioner’s own initiative or because an employer purported to make a voluntary disclosure statement under proposed section 33 of the SGC Act (at item 14 of Schedule 1 to the Main Bill) that contained inaccurate or incomplete information and the Commissioner subsequently makes an SG charge assessment based on information acquired by other means (third-party information).
The Joint Bodies (p. 24) recommended that, once the ATO becomes aware of third-party information, the Commissioner should be compelled to inform the employer of the inaccuracy or the incompleteness of the Voluntary Disclosure Statement, and give the employer adequate time to correct it to avoid receiving a Commissioner-initiated assessment. They also recommended that employers be eligible for a voluntary disclosure reduction for longer than 120 days after the QE day when they make efforts to correct errors as soon as practicable.
The Joint Bodies further commented that ‘the proposed design of the changes to the maximum contribution base and the current operation of the employer shortfall exemption certificate are impractical and require further urgent consultation.’
ACCI (p. 4) said: ‘The administrative uplift is many multiples of the actual cost to the ATO of administering the payday super framework and represents a punitive double penalty on the employer for late payment.’ It recommended (p. 5) ‘that where an employer makes a voluntary statement, the administrative uplift component of the penalty is removed.’
Key issue: Penalties
Currently, employers are liable for a ‘Part 7 penalty’ under the SGA Act if they lodge their SGC statement late, or fail to provide a statement or information when requested during an audit. The maximum penalty is 200% of the SG charge.
The penalties regime will change significantly from 1 July 2026.Under item 16, proposed section 59A, if SG charge remains unpaid 28 days after becoming payable, the ATO will issue an employer a notice to pay within 28 days of the notice (proposed subsection 59A(3)). Under proposed section 59C, if the employer does not pay the SG charge included in a notice to pay within the period set out in the notice, they will be liable to a late payment penalty of 25% on the outstanding amount. If an employer has had a previous late payment penalty imposed within the two years prior, the penalty can increase to 50%. Under proposed section 59B, if an employer pays the outstanding SG charge in the notice partially or in full before the notice expires, any potential exposure to the late payment penalty will be similarly partially reduced or reduced to zero. A penalty will not be payable by employers covered by a determination made by the Commissioner under subsection 18C(4) (discussed above) setting out employers affected by exceptional circumstances.
Ai Group (p. 16) said it supported graduated penalties but that: ‘caution is appropriate regarding any crude levying of penalties based on an employer having multiple superannuation payment problems within a 24-month period’.
The Joint Bodies called for (amongst other things):
- a grace period for education and support (pp. 4, 10)
- proportionate penalties based on culpability (p. 5)
- a Commissioner’s power of remission for honest mistakes (pp. 5, 20) and
- full real-time transparency for employers over ATO data relating to their SG obligations (pp. 7, 33).
SMC (p. 6) supported strong penalties ‘applied in a graduated manner with penalties increasing by reference to the level of non-compliance’ but with certainty as to when penalties will apply. It supported an ATO discretion to remit penalties only in specific circumstances set out in the SGA Act or regulations.