Further relief needed for genuine employers under Payday Super: The Tax Institute

“Employers who are genuinely trying to comply may still face adverse outcomes despite the administrative concessions set out in PCG 2026/1,” Storey said.

“In these circumstances, an employer may have taken all reasonable steps to make a contribution on time yet still technically fail to meet the legislative timing requirements.”

He noted delays outside employers’ control, due to third parties such as financial institutions, clearing houses, and superannuation funds, as well as employee information errors, and proposed that employers be given relief.

“Under the [institute’s] proposal, relief would apply where the employer makes the payment within the required timeframe, any delay is caused by factors beyond the employer’s reasonable control, and the employer has acted in good faith and exercised reasonable care,” Storey said.

In addition, the institute said that the transition from quarterly SG payments to Payday Super may incur more than 12 months of contributions for some employers in a single financial year.

This may lead to top concessional contribution cap issues or excess contributions tax outcomes despite zero change to actual entitlements, Storey said.

“This could occur if employers brought forward contributions before 30 June 2026, or when the transition results in additional contributions being recognised in FY2027.”

Further, currently, employers will only be notified when contributions are made late to employees.

“This creates compliance risks because employers may only become aware of a problem after penalties and interest have accrued,” Storey said.

The Tax Institute noted that the profession is advocating practical transitional measures to distinguish genuine compliance efforts from deliberate non-compliance. 

“Advisers should continue helping clients review payroll processes, understand the new contribution requirements and maintain evidence of reasonable compliance efforts.”