Payday Super is Here: What It Means for Your Business
The way employers pay superannuation is changing.
With the introduction of Payday Super, employers will need to pay their employees’ superannuation at the same time they pay wages, rather than making quarterly super payments. While this represents a significant change for many businesses, preparing early will make the transition much easier.
For employers, Payday Super isn’t just about changing when super is paid. It’s also about ensuring super is being calculated correctly on an employee’s earnings and that payroll systems are set up accurately.
What is Payday Super?
Under the current Superannuation Guarantee rules, employers generally pay employee wages throughout the quarter before paying superannuation by the quarterly due dates.
Under Payday Super, super contributions will instead be paid alongside each payroll cycle. Whether you pay your employees weekly, fortnightly or monthly, their super will also need to be processed at the same time.
This change is designed to reduce unpaid super, improve compliance and help employees receive their retirement savings sooner.
Understanding Qualifying Earnings
You may have heard the phrase qualifying earnings when reading about Payday Super or payroll compliance.
While this is a commonly used international term, in Australia superannuation is generally calculated on an employee’s Ordinary Time Earnings (OTE). These are the earnings that qualify for Superannuation Guarantee contributions.
For Australian employers, the important question is not simply when super is paid, but whether payroll is correctly identifying the earnings that attract super.
If super is not being calculated on the correct earnings, employees may receive less than they are entitled to, creating additional work, penalties and interest if the issue is identified by the Australian Taxation Office.
Why This Matters
With super being reported and paid much more frequently, payroll errors will become visible much sooner.
Many businesses have payroll categories that were established years ago and have never been reviewed. As legislation changes and businesses grow, payroll settings may no longer reflect current requirements.
Reviewing your payroll now can help ensure super is being calculated correctly across all relevant earnings and reduce the risk of future compliance issues.
Cash Flow Will Need to Change
One of the biggest impacts of Payday Super will be cash flow management.
Businesses that have traditionally paid super quarterly will no longer have that additional time before payment is required.
Instead, every payroll cycle will include:
- Employee wages
- PAYG withholding obligations
- Superannuation contributions
This means businesses will need to budget for these costs throughout the year rather than planning for quarterly payments.
Good cash flow management will become more important than ever.
Review Your Payroll Software
Most modern cloud accounting platforms, including Xero, already support payroll and superannuation processing.
However, software is only as accurate as the information entered into it.
Now is an excellent time to review:
- Employee payroll categories
- Ordinary Time Earnings classifications
- Leave settings
- Allowances
- Salary sacrifice arrangements
- Superannuation rates
Small errors today can become much larger issues once super is being paid every pay cycle.
What Happens if Super Is Incorrect?
Payday Super is expected to improve visibility for both employers and the Australian Taxation Office.
Late or incorrect super payments may result in:
- Superannuation Guarantee Charge liabilities
- Interest
- Administrative penalties
- Additional compliance costs
Processing payroll accurately from the beginning is far easier than correcting errors after they occur.
How Atium Accounting Can Help
Atium Accounting works with businesses throughout Bendigo and across Australia to help them meet their payroll and superannuation obligations.
We can help you review your payroll systems, confirm that super is being calculated correctly on Qualifying Earnings, identify payroll categories that may require attention, assess the cash flow impact of Payday Super and ensure your payroll software is configured correctly before the new requirements apply.
Our aim is to help businesses stay compliant while making payroll as simple and efficient as possible.
Preparing Now Will Save Time Later
Although Payday Super changes the timing of super payments, it also provides businesses with an opportunity to review their payroll processes and improve compliance.
By reviewing your payroll settings, confirming that super is being calculated on the correct earnings and ensuring your payroll software is operating correctly, you can transition to Payday Super with confidence.
If you’d like to understand how these changes may affect your business, the team at Atium Accounting is here to help. We can review your payroll, answer your questions and ensure you’re ready before the new requirements commence.