ATO clarifies compliance approach for incoming Payday Super regime

"The ATO’s main compliance focus will continue to be on those who do not pay at all or deliberately underpay their employees and this is where Payday Super data will help us to prevent significant unpaid entitlements from accumulating, where there is clearly no intention to comply," said Rosenzweig, speaking at the AFR Workforce Summit.

Rosenzweig said that while Payday Super will give the ATO the "ability to identify discrepancies like never before", it would not be taking compliance action on every data mismatch.

"We will always apply the law when we look at an employer’s affairs, but our focus will be on helping employers get it right, especially in the first year of Payday Super," she said.

The Tax Office, she said, was aware that some employers had not left themselves enough time to make the changes needed with their payroll systems and business processes to accommodate Payday Super.

"While they may not be entirely ready on day one, there is still an expectation that employers are paying their employees’ super," she said.

"Employers who demonstrate they are doing everything they can to pay SG contributions in line with payday cadences, are likely to be low-risk and won’t be the focus of ATO compliance activity."

The ATO outlined its compliance approach for the first year of Payday Super in its practical compliance guide, PCG 2026/1, earlier this year.

The practical compliance guide explains the ATO's risk-based approach and how it will classify employers as low, medium or high risk based on their SG payment behaviour.

"The PCG is very clear that we won’t be applying compliance resources to employers who pay super on payday and fix errors quickly," Rosenzweig added.

"We will monitor how the system is bedding down and consider whether we need formal advice about our compliance approach beyond this first year."

As the 1 July start date for Payday Super fast approaches, Rosenzweig urged employers to ensure that everyone in their business understands what the changes meant.

"Ensure that you have involved the whole of your business in understanding what this will mean, including your HR teams, your tax teams and your leadership group – don't just leave it to payroll," she said.

Rosenzweig said businesses should also consider planning for potential cash-flow implications during the transition year.

"It's a good idea to review your expected pay cycles for July, where there may also be a final quarterly super payment due on 28 July."

"Finally, ensure systems and software are ready as updates are rolled out by providers and that you’ve fully considered the features offered by your provider."