Currently, compulsory superannuation contributions must be paid by employers by the 28th day after the end of the quarter in which an employee is paid salary or wages. In a statement released on 2 May, the Federal Treasurer Dr Jim Chalmers announced that from 1 July 2026, compulsory superannuation contributions will have to be paid at the same time as the related salary and wages. The delay to 1 July 2026 is to allow employers, superannuation funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change.
Once implemented, this change will probably simplify payroll administration for employers, as the payment of salary, wages and super will involve one action rather than two, but the earlier payment of super contributions may have an adverse effect on cash flow. For employees, the earlier payment of super contributions will probably result in a modest increase in total super earnings. In his statement, Dr Chalmers estimated that a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5% better off at retirement.
But the main reason for the change must surely be to make it easier to identify employers who fail to make compulsory super contributions. According to Dr Chalmers, the ATO estimates that $3.4m worth of super contributions went unpaid in 2019-20. Under the Budget proposal the Federal Government will also provide $40.2 million to the ATO in 2023–24, which includes $27.0 million for the ATO to improve data matching capabilities to identify and act on cases of SG underpayment by employers and $13.2 million for consultation and co-design. Presumably employers will be required to report the payment of super along with the payment of salary and wages through single touch payroll. The next step might be to require super funds to report the receipt of contributions, with the ATO querying employers if a reported payment is not matched by a reported receipt.
Please contact your Nexia advisor if you need assistance in relation to outstanding SGC contributions, or have any queries in relation to this change.
