Small businesses pushed to pay for alternative super services

Missed deadlines could result in non-compliance with Payday Super, due to commence on 1 July. As reported previously in Accountants Daily, the new rules require employers to ensure that their employees’ superannuation guarantee contributions are paid at the same time as their salaries and wages.

But there are three alternatives: adopting Payday Super compliance payroll software; sourcing a third-party commercial clearing house; or paying a registered tax practitioner or BAS agent, if applicable.

Robyn Jacobson, senior advocate of the National Tax and Accountants’ Association (NTAA), said all options “involve a cost”.

“For employers who have not yet sat down to consider and monitor their cash flow very closely, this could place some challenges on those businesses,” Jacobson told Accountants Daily.

“I would encourage any employer who has not yet seriously turned their mind to Payday Super to please turn their minds to it. We are less than a week from the start of the new regime … so the sooner they do this, the better.”

According to an Employment Hero survey, two in five Australian businesses have not reviewed, or are unsure about, their cash flow.

The employment company’s modelling demonstrated that businesses need an average of $124,000 in additional working capital, as many face a confluence of factors that could significantly impact their cash flow.

Jacobson said while the ATO’s compliance will be in force from 1 July, companies could still fall into its “green zone” if payment arrives a few days late, as long as they can prove they made efforts to get it right.

“We also expect the ATO will be quite proactive in engaging with employers where there may be a late or a non-payment of superannuation before the Super Guarantee Charge (SGC) assessments are automatically issued.”

The SGC is a legally enforceable debt applied when an employer fails to pay the correct superannuation on time, pays less than required, or pays into the wrong fund.

Under the new regime, small business employers would not be notified when contributions are received by a fund, with Jacobson explaining that doing so would “add a lot of unnecessary noise to the system”.

Instead, employers would be notified when payments are rejected.

Jacobson said it would need to be closely monitored in July and August to assess the effectiveness of the rejection notices.

Much like with the single touch payroll changes, which came into effect in July 2018, the ATO is uninterested in acting as a software provider and has requested that small businesses find third-party solutions.

The NTAA made submissions to the government that the concept of an approved clearing house – where an employer meets their obligations by making sure the payment makes it to the clearing house before the deadline – be expanded to include certain approved commercial clearing houses.

“That recommendation was not adopted, and instead the concept of the approved clearing house is being repealed altogether,” Jacobson said.