Recently Treasury released details regarding the design of new rules to apply from 1 July 2026, under which employers will be required to pay employees’ superannuation guarantee (SG) entitlements at the same time as salary and wages, instead of the current quarterly obligation.
The new rules just announced are akin to a set of principles that will be applied in creating the detailed rules. Some key things to note are:
- SG on Ordinary Time Earnings (OTE) will be due in employees’ superannuation accounts seven days after the relevant ‘payday’.
- Some exemptions will apply – including for new employees (two week deferral period) and the payment of small off-cycle amounts (due with the next regular pay cycle).
- Changes will also be implemented regarding the late payment of SG.
Under the current rules, the following applies:
- Shortfalls are calculated with reference to salary and wages, and not just OTE.
- Late SG payments are subject to an interest charge of 10 per cent per annum.
- An administration fee of $20 per employee per quarter applies.
- Penalties and general interest charge can also apply on top of this.
- The SG charge is not deductible.
Under payday super:
- Shortfalls will be based on OTE only.
- An interest charge will be calculated at the ATO general interest rate (11.36 per cent at the time of writing) on a compounding basis, rather than a flat 10 per cent per annum.
- The administration fee will be calculated at up to 60 per cent of the SG shortfall component, rather than $20 per employee per quarter. This may however be reduced, such as after a voluntary disclosure.
- General interest charge will continue to accrue for periods after assessment of an SG charge until payment.
- An additional SG charge payment penalty of up to 50 per cent of the SG charge amount will be applied to employers that have been assessed for SG charge and have not made payment in full within 28 day of the assessment being issued.
- SG charge will be income tax-deductible for employers however any penalties and interest after assessment of SG charge will not.
- Contributions will automatically be offset against the first of any late superannuation contributions.
Superannuation on government paid parental leave
In other news, the contribution of superannuation guarantee on Government Paid Parental Leave has been legislated and is set to apply from 1 July 2025.
Moving forward
Employers should review their current payroll processes and ensure that their systems and processes are ready for the implementation of payday super on 1 July 2026.
Note that the ATO will have increased visibility of superannuation and ability to data match, which will allow a much more proactive approach to identifying late or missing superannuation.
How can we help?
Grant Thornton can assist with a review of pay codes to ensure that they are configured correctly in relation to the application of superannuation guarantee. Areas where we typically see errors include:
- Allowances and whether they are expected to be fully expended.
- Annual leave loading and the nature of this payment in the specific business.
- Workers compensation payments not identifying whether an employee is working.
- Penalty rates incorrectly considered overtime.
Additionally, we can provide payroll process reviews, sample recalculations, and other assurance activities to assist in identifying issues and risk areas for improvement.
If you require assistance, please reach out to Elizabeth Lucas or your usual Grant Thornton advisor.
Learn more about how our Employer superannuation services can help you
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