Payday Super: Two Months In, and What's Actually Biting

Mia: Welcome to the podcast, our newsletter made easy. Please note, this podcast features AI-generated voices for your hosts, Mia Taylor Leo: and Leo Baker, bringing you expert insights from the team at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax, whether it's for your individual finances or the complexities of your business. Mia: We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. Leo: So, if you're looking to understand your obligations, maximise your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! Mia: This one comes from Vikaash, who recently switched across. He says the team was very helpful advising on and setting up a new tax entity that suited his needs, and that they organised everything ridiculously fast, at a very competitive price. Leo: Thank you, Vikaash. And getting things set up properly before they become a problem is a good theme for today, because today's topic is one where the businesses who prepared are fine, and the ones who didn't are finding out the hard way. Mia: What are we covering? Leo: Payday Super. It started on the first of July, so we're about two months in, and the pattern of what's going wrong is now pretty clear. Mia: We covered this back in Episode 33. Leo: We did, and that was the preview. This one is the practical version. What it actually feels like to run payroll under it. Mia: Give me the one-line version for anyone who missed it. Leo: Super used to be quarterly. Now it goes with every pay run. Mia: And that's it? Leo: That's the whole idea. But the detail is where people are getting caught, so let's bring in Harvey. Harvey, welcome back. Harvey: Thanks. And I'd start with the thing that surprises people most, which is that this is not really a cost increase. It's a timing change. Those are very different problems. Mia: Explain that, because I assumed businesses would be paying more. Harvey: Most won't be paying more in total. The super guarantee rate is unchanged at twelve per cent. Who you pay it for hasn't changed. And the earnings you calculate it on are, for almost everyone, the same earnings as before. Leo: There's a new term though. Harvey: There is. Qualifying earnings. It replaces ordinary time earnings as the base for the calculation, and it sounds like a big expansion. Mia: But it isn't? Harvey: The tax office is quite explicit about this. For most employers, qualifying earnings doesn't change the amount of super guarantee you pay. Everything that counted before still counts. Mia: So what did change? Harvey: One thing on what counts. Commissions for work done entirely outside ordinary hours are now included. If you don't pay that kind of commission, the earnings you calculate on are the same as last year. The only other moving part is the cap for very high earners, which is now an annual figure of $270,830 for 2026-27 rather than a quarterly one. Leo: And if you do? Harvey: Then it's worth checking with your bookkeeper this month rather than finding out later. But it's a narrow category. Mia: Okay. So if the amount is the same, what's actually gone wrong for people? Harvey: The deadline. And specifically, one word in the deadline. Mia: Which word? Harvey: Received. The rule is that the contribution must be received by your employee's super fund within seven business days of payday. Not sent by you. Received by them. Leo: That's a genuinely different obligation. Harvey: It's a completely different obligation. Under the old quarterly system, most people thought in terms of when they made the payment. Now the clock only stops when the money lands in the fund and the fund has enough information to allocate it to that member's account. Mia: So whatever sits in between is my problem. Harvey: Your clearing house, your payroll provider, your bank. If any of them take three days, those three days are yours. Mia: That feels harsh. Harvey: It's the single biggest adjustment. And it's why the tax office has been pushing the New Payments Platform, which can get a contribution to a fund the same day. If your provider supports it, that pressure largely disappears. Leo: Harvey, there's a detail in the deadline that I think almost nobody knows. Harvey: The business day definition. Yes, this one is genuinely odd. Mia: Odd how? Harvey: A business day excludes weekends, and it excludes any day that is a public holiday for the whole of any Australian state or territory. Mia: Any state. Harvey: Any state. So if the Northern Territory has a public holiday, that is not a business day for Payday Super purposes, for everyone in the country. Even if you're in Perth and it's an ordinary working Monday for you. Leo: The tax office's own worked example uses Picnic Day in the Northern Territory. Harvey: It does. And it works in your favour, to be fair. It gives you an extra day. But if you're calculating your deadline off your own state's calendar, you'll get the wrong answer. Mia: Is there a catch to that? Harvey: There is. If a holiday only applies to part of a state, it still counts as a business day. Their example is the Royal Hobart Show. So it's whole state or territory, not partial. Mia: So I can't just count weekdays. Harvey: You can't. And most payroll software now handles it, but if you're doing it manually, that's a real trap. Leo: Let's talk about the thing that caught the most people, which is the clearing house. Harvey: The Small Business Superannuation Clearing House. It's gone. Mia: Gone entirely? Harvey: Entirely. It closed to new users back in October twenty twenty-five, existing users had access until the thirtieth of June, and from the first of July it simply isn't there. Mia: And that was a free service. Harvey: It was a free tax office service that a lot of small employers had used for years. If you were still relying on it in June, you needed to have moved to a commercial clearing house or a payroll platform before your first July pay run. Leo: And if someone didn't? Harvey: Then they've had a difficult two months. That's the single most common problem we've seen. Leo: Harvey, can we talk about cash flow, because I think that's the quieter half of this. Harvey: It's the half that doesn't show up as a compliance problem, but it's the one that actually changes how a business feels. Mia: What changes? Harvey: Under quarterly super, you accrued the liability across three months and paid it after the quarter ended. So at any given moment you were holding money that was owed but not yet due. Leo: Which a lot of businesses were quietly using as working capital. Harvey: Whether deliberately or not, yes. And that buffer is gone. From the first of July, the super leaves with the wages. Mia: So the total is the same, but you never get to hold it. Harvey: Exactly right. The annual cost is unchanged. What's changed is that you no longer have a rolling balance sitting in your account. Mia: And for a business that was relying on that without realising? Harvey: Then the first quarter under the new rules is when it becomes obvious. Which is roughly now, for anyone paying monthly or fortnightly. Leo: Is there anything to do about it? Harvey: Plan for it rather than discover it. Look at your quarterly super bill from last year, divide it across your pay cycles, and check that your account can carry that every fortnight rather than every three months. If it can't, that's a conversation to have before it's urgent, not after. Mia: That's a really practical point. Harvey: It's the one I'd want any small employer to take away, honestly. The compliance side is manageable. The cash flow side is what catches people who were closer to the line than they realised. Mia: Alright. What happens if you miss the seven days? Harvey: You move into the super guarantee charge. And that's been rebuilt as well, so it's worth understanding what it looks like now. Mia: How is it different? Harvey: Four ways. First, you no longer self-assess it. Under the old system you had to lodge a super guarantee statement yourself. Now the tax office assesses it. Leo: Which sounds easier, but means they know. Harvey: It means it's automatic. They're getting your qualifying earnings and your super liability through Single Touch Payroll every pay run, and the fund reports what it received and the date it landed. The mismatch is visible to them without you lodging a separate statement. Mia: That's a big change. Harvey: It's the enforcement change that makes the rest work. Mia: What's second? Harvey: The interest. It used to be a flat ten per cent a year, counted from the start of the quarter. Now it's the general interest charge, currently a bit over eleven per cent, compounding daily from the day the seven business days run out. Mia: So it builds on itself. Harvey: Daily. Which means a small shortfall left alone for a long time behaves very differently to how it used to. For something fixed within a few weeks it can actually be less, because the clock starts later. Leo: And the third? Harvey: An administrative uplift. It's an amount on top to reflect the cost of enforcement, and it's designed to encourage you to come forward. It can be reduced if the tax office hasn't already taken action, and if you make a voluntary disclosure. Mia: So there's a real reward for putting your hand up first. Harvey: A meaningful one. If you know you've missed something, disclosing it is materially better than waiting to be found. Mia: And the fourth? Harvey: This one genuinely surprised me. The super guarantee charge is now tax deductible. Mia: It wasn't before? Harvey: It was explicitly not deductible. That was part of the punishment. Now it is. Leo: That's a softening. Harvey: It is. And so are the penalties. They used to be up to two hundred per cent of the charge. Now the penalty only comes in if the tax office assesses you for the charge and you still haven't paid it twenty-eight days after they send you a notice to pay. Then it's twenty-five per cent of what's still unpaid, or fifty per cent if you've had one of those penalties in the previous two years. Mia: So the penalties went down. Harvey: The headline penalties went down, the interest got sharper, and the detection got automatic. That's the trade. It's less about punishing a single mistake and more about making it very hard to be quietly late for years. Leo: Which is what the old system allowed. Harvey: Which is exactly what the old system allowed, and that's why it changed. Mia: Harvey, are there any situations where you get more than seven days? Harvey: Yes, and these matter, because people assume the seven days is absolute. Mia: Start with the obvious one. Harvey: New employees. The first contribution for a new employee has twenty business days, not seven. Same if an existing employee moves to a new fund and you're contributing there for the first time. Leo: That's a sensible allowance. Harvey: It is, because that's exactly when you're waiting on fund details. But note it's only the first one. The second contribution for that employee is back to seven business days. Mia: What about one-off payments? Say a Christmas bonus. Harvey: Good example, and the tax office uses that one. If you make a payment that's out of cycle with the employee's normal payday, the super on it isn't due seven days later. It's due with the contribution for their next regular payday. Mia: So it rides along with the next normal run. Harvey: Which is much more practical than forcing a separate contribution for a one-off bonus. Leo: And there's a disaster provision, isn't there. Harvey: There is. The tax office can formally determine that a class of employers hit by a natural disaster, or a widespread IT or telecommunications outage, gets more time. Their worked example is a flood. Those employers get twenty business days, counted from the payday or from the date of the determination, whichever is later. Mia: That's reassuring. Harvey: It is, though it's a determination they make, not something you claim. So it's not a plan, it's a safety net. Mia: Harvey, one thing I want to double-check. Who counts as an employee for this? Harvey: Unchanged, and that's worth saying because people assume everything changed. The same people you paid super for in June are the same people you pay super for now. Leo: Including contractors. Harvey: Including independent contractors who are paid mainly for their labour. They're treated as employees for super guarantee purposes, and they always have been. Mia: So if someone's been getting that wrong, it just got riskier. Harvey: Considerably. Under quarterly super you might not have been noticed for a long time. Now the reporting is per pay run and the assessment is automatic. A long-standing contractor classification problem is a much shorter fuse than it used to be. Mia: Is there anything that's changed at the fund's end? Harvey: Yes, and it's worth knowing because it affects you. Super funds used to have twenty business days to allocate or return a contribution. They now have three. Leo: So errors surface much faster. Harvey: Much faster. If you've sent a contribution with bad member details, you'll know within days rather than a month. Which is better, but it does mean your data quality matters more than it used to. Mia: And I imagine bad data is a common cause of late contributions. Harvey: It's one of the main ones. The contribution isn't on time until the fund can actually allocate it. A payment that arrives without the information to match it to a member isn't finished. Leo: There's a small change on stapled funds too. Harvey: From late March this year, you can request an employee's stapled fund details and offer them at the same time you give them their choice form. Previously you had to wait until they hadn't chosen. Mia: Which saves a step at onboarding. Harvey: And onboarding is where the twenty business day extension is doing its work, so anything that speeds it up helps. Mia: Alright, practical close. If someone's listening and they run payroll, what should they check this week? Harvey: Four things. First, are your contributions actually arriving within seven business days, or are you assuming they are because you paid on time? Look at a real pay run and check the receipt date, not the send date. Leo: And second? Harvey: If you were a clearing house user, confirm what you're using now and that it's working. Don't assume the transition went cleanly just because nobody complained. Mia: Third? Harvey: Check whether you pay any commissions for work done outside ordinary hours, because that's the one calculation change. Leo: And fourth? Harvey: Look at your employee data quality. Wrong member numbers and mismatched names are the quiet cause of late contributions, and you'll now find out within three days instead of twenty. Mia: And if someone realises they've already missed some? Harvey: Then come forward rather than wait. The administrative uplift can be reduced for voluntary disclosure, and the charge is deductible now. The worst version is being found by the system, and the system is watching every pay run. Leo: One thing worth adding on that. Harvey: Yes. For this first year, to the end of June twenty twenty-seven, the tax office has said in writing that employers who are genuinely trying to pay on time, and who fix a late or bounced contribution as soon as they can, are not where its compliance effort is going. The charge still exists in law, but the focus is on employers who aren't making the switch at all, or aren't paying super at all. Mia: Harvey, thank you. Harvey: My pleasure. And if anyone's unsure whether their pay runs are actually landing on time, the team at Aevum Accounting can check a cycle and tell you in an afternoon. Mia: So let's recap. Payday Super started on the first of July. Super now goes with every pay run instead of quarterly. Leo: The rate is still twelve per cent, and for most employers the amount hasn't changed. Only the timing has. Mia: The contribution has to be received by the fund within seven business days of payday, not just sent by you. Leo: And a public holiday anywhere in Australia removes a business day for everyone, as long as it covers the whole state or territory. Mia: The small business clearing house is gone. If you haven't replaced it, that's urgent. Leo: New employees get twenty business days for the first contribution, and out-of-cycle payments ride along with the next regular payday. Mia: The super guarantee charge is now worked out and assessed by the tax office from your payroll and fund data, interest compounds daily, and it's tax deductible for the first time. Leo: And the penalty is now twenty-five or fifty per cent of an assessed charge you still haven't paid after a notice to pay, but detection is now automatic through Single Touch Payroll. Mia: If you want someone to check whether your contributions are actually landing on time, head to aevumaccounting.com.au and book a session with the team. Leo: Or head to Aevum Accounting at aevumaccounting.com.au and we'll look at a real pay run with you. Mia: Before we go, a quick but important reminder. The information shared today is for general informational purposes only, and does not constitute specific tax or financial advice. Leo: Everyone's situation is unique, and tax laws are complex. For personalised advice tailored to your situation, we always recommend consulting with a qualified professional. Mia: Until next time, stay savvy, stay proactive... Leo: And go and check when your super actually landed!