Jul 7, 2025 Joel Hernandez

Payday super Exposure Draft released

Introduction

In the 2024 Federal Budget, it was proposed that payment of employer super contributions should align with the payroll cycle rather than at the end of every quarter. These reforms were in response to the consultation paper Securing Australians’ Superannuation package.

Key Reforms

Some key takeaways from the exposure draft include: –

1. Updated super guarantee charge (SGC) calculation including
2. A revised nominal interest component which represents the daily lost earnings for the employee as a result of their super having been paid late. This interest rate is the ATO general interest charge which is higher than market interest rates.
3. Removing the flat $20.00 administration fee for each quarter and replacing it with a percentage-based calculation of up to 60% of the SG shortfall
4. Late super contributions will be applied to reduce the SGC shortfall
5. Employers will have 7 days from the end of the payroll cycle to make their super contributions
6. Minor terminology and definition changes such as replacing the concept of ‘Ordinary Time Earnings’ with ‘Qualifying Earnings’. The new term ‘Qualifying Earnings’ will seek to consolidate payments that are excluded from super guarantee across the ordinary time earnings concept and other specific exclusions in the SGA Act
7. Removal of the ATO Clearance House to improve efficiency and integration of payroll software
8. Additional late payment penalties according to a percentage of the shortfall super amount. This penalty could be up to 50% of the shortfall super if the ATO deems the taxpayer to be a repeat offender.
9. Super guarantee shortfall and charges will be tax deductible, but not the penalty components. Currently, only super contributions which are paid on time are tax deductible

Conclusion

The ATO has called for feedback and comments from stakeholders prior to draft legislation coming before Parliament.  It is anticipated that all payroll software will incorporate these reforms into their systems by the start date of 1^st July 2026.

We are monitoring developments with this legislation and will keep clients updated on developments.