Industry bodies call for delay to Payday Super

A collective of industry bodies, including Chartered Accountants ANZ and the Financial Advice Association Australia, want the government to push the implementation of Payday Super to July 2028.

In a joint submission to Treasury, eight industry lobby groups have said the superannuation industry and small businesses cannot sufficiently prepare for the introduction of Payday Super obligations by July 2026. Many technology changes and improvements are required, they said.

The groups making the call are the Australian Bookkeepers Association, Chartered Accountants ANZ, CPA Australia, Financial Advice Association of Australia, Institute of Certified Bookkeepers, Institute of Public Accountants, SMSF Association and The Tax Institute.

While legislation is yet to be enacted, Payday Super is slated for 1 July 2026 and designed to ensure employees are paid their Superannuation Guarantee entitlements with wages. It would curb the issue of unpaid super in Australia by increasing the penalties for employer non-compliance; it's estimated some $41.5 billion in super has gone unpaid over the past nine years.

Still, the groups have said that if the timeframe is not extended, "a period of chaos would ensue as businesses try to fulfill their compliance obligations through a system that potentially can't deliver."

If 24 months can't be done, they've said they'll settle for a 12-month delay. They'd also like to see implementation tiered, beginning with larger entities. Further, a grace period should be instituted to allow employers to receive education and support without immediate penalty for non-compliance, the groups recommended.

In all, the collective supplied 22 recommendations to Treasury.

One of the primary concerns is that the superannuation transmission network will not be ready to manage the increase in traffic it would see.

"We believe it is vital to postpone the start date for Payday Super by at least a year, ideally 24 months, to allow all stakeholders sufficient time to comply with the new logistical demands on the system," CPA Australia superannuation lead Richard Webb said.

"The superannuation transmission network is fundamental to the successful delivery of Payday Super. If it is not adequately prepared for the transition it would create a perfect storm of confusion and uncertainty for both employees and employers.

"The practicalities of delivering once-in-a-generation reform of the infrastructure underpinning the superannuation payments system are extremely challenging."

Other recommendations include:

• Consulting with the SMSF industry to clarify whether the regime suits the purpose of SMSFs.
• Extending the window for contributions to be processed and received by super funds from seven calendar days to 10 business days.
• Extending the window for correction where incorrect fund information leads to rejected payments.
• Ensure the severity of penalties considers whether shortfalls in payments are accidental or deliberate.
• Allow employers with a good compliance history to make voluntary disclosures of historical shortfalls without penalty and to remediate 'honest mistakes' without penalty.
• Give the Commissioner remission powers to fully or partially remit penalties where there are no signs of deliberate non-compliance.

"Payday super is a significant reform that we support in principle, but we need to get the balance right," CA ANZ group executive, advocacy and international development Simon Grant said.