Government to address Payday Super snag that has tax agents worried

This is because employers can currently pay their workers’ superannuation up to 28 days after the end of a quarter, meaning that super contributions for the final quarter of a given financial year could land in employees’ accounts during the next financial year.

While this wasn’t typically cause for concern, the transition to payday super could cause some workers to receive 15 months’ worth of super payments in a single financial year, inadvertently pushing some above their annual concessional contributions caps.

This issue would be most acute for high-income earners, but Spinks noted that those who were salary sacrificing could also breach the cap and land a substantially higher tax bill due to the timing mismatch.

“If you've got a 47 per cent rate of tax and you've only had 15 cents taken because it was a concessional contribution, then that’s 32 per cent additional tax that you'll have to pay on that amount,” she said.

“You're tripling your tax rate, basically, on some of those contributions.”

Spinks said she hoped that the Commissioner of Taxation would use discretion in cases where individuals had inadvertently breached their concessional contributions caps purely due to timing issues during the transition to the new Payday Super laws.

“The commissioner has discretion to disregard an excess concessional contributions tax notice,” she noted.

“The ATO is obviously bound by the legislation. I think we could look at provisions that are already in the legislation, but could make it a lot easier for taxpayers and to have some of these [excess tax bills] disregarded.”

The office of Assistant Treasurer Daniel Mulino told Accountants Daily they were aware of this issue and planned to introduce amendments to ensure individuals would not be impacted by inadvertent breaches of concessional contribution caps during the transition year.

“The government will ensure people in these circumstances are not adversely affected as part of the transitional arrangements to support the introduction of Payday Super,” a spokeswoman for Daniel Mulino said.

“We passed the primary legislation to enact Payday Super in 2025 ahead of the 1 July 2026 start date, and we're progressing the implementation arrangements with the ATO including remaining legislative and regulation changes.”