IPA flags potential trap with transitional rule for payday super

The IPA noted that some employers could have multiple payday super due dates in July before quarterly contributions under the old scheme are even due.

This July, she explained, “will see an overlap of existing quarterly SG contribution rules and the new Payday Super regime.

Under existing rules, the contributions for the quarter ending 30 June 2026 will be due 28 July. At the same time, SG contributions for any paydays on or after 1 July will be due within seven business days.

"So an employer could potentially have one, two or even three Payday Super due dates in July - depending on their payroll frequency - before the quarterly contribution for June is even due," said Chen. 

Chen said accountants and tax practitioners need to be aware of a transitional rule buried in the PayDay Super legislation.

"The law says that any superannuation contributions that an employer makes for an employee between 1 July and 28 July 2026 will firstly be applied to discharge any outstanding SG liability for that employee for the June 2026 quarter," she said. 

"Only once the June obligation is reduced to nil will any remaining contribution be applied to a liability under the Payday Super rules.”

As such, a regular SG contribution made in July will go towards the June quarter liability, instead of the July Payday Super obligation. While this would even out once the employer paid the June quarter by 28 July, the risk of unintentional July super shortfalls remains.

To avoid this, Chen urged employers to “pay the June quarter contribution by the time the first Payday Super contribution is due - even if the due date for the June quarter contribution is later than the due date for the July payday contribution.”

The ATO’s draft guidance, she stated, could be found in LCR 2026/D3, especially in Examples 3 and 4.

On its compliance approach for the 2026-2027 financial year, the first year of Payday Super, Chen explained the ATO said “that it will not proactively review employers where the employer has made best efforts to comply, even if the contributions are received a little late, as long as any delay is sorted out as soon as practicable.”

She also expressed hope that the ATO will “apply a common sense approach in relation to employers who pay promptly for July paydays and also pay their June quarter liability on time, even if inadvertent shortfalls arise due to the transitional rule.”

Chen also reminded practitioners that after 28 July, contributions can only be applied to Payday super obligations. She continued: “If the June quarter liability is not fully discharged after 28 July, the outstanding amount will be fully subject to the existing SG charge rules and must be discharged under those rules, even if the employer makes excess payments under Payday Super.”

Chen concluded: “With only three months to go, accounting and tax professionals need to work with their employer clients right now to plan their business cash flow for the requirements of Payday Super - and particularly for the critical month of July with overlapping obligations under the current and new laws.”

As recently reported in Accountants Daily, a survey of tax specialists found less than five per cent of the businesses they work with are fully prepared for the upcoming super changes.

According to the Tax Institute, the main implementation hurdles surround payroll system readiness and increased costs, especially for small-to-medium businesses considering the growing regulatory burdens they are facing.