Super Nation is a fortnightly column that examines, explains and analyses key issues in one of Australia's largest, fastest-growing and most critical industries: superannuation.
The additional tax on accounts with more than A$3 million (US$1.95 million) is not the only superannuation reform that the Australian Government is facing resistance to, with Payday Super looming as another potential retirement savings battleground.
Although the principle of paying super with wages and salaries has almost unanimous support and theft of super through non-payment is condemned with equivocation, some influential organisations have called for a delay in the introduction of the changes.
Australia’s peak taxation, superannuation and financial advice bodies have urged the Government to postpone the start of the new system for up to two years from 1 July 2026 to give the super industry and small businesses time to prepare.
The group led by CPA Australia acknowledged that paying super alongside wages and salaries would address the A$5.2 billion super gap. This is the difference between what employers should have paid and what they paid into employees’ accounts.
CPA Australia Superannuation Lead Richard Webb said the organisation was a strong advocate for Payday Super goals but the super industry and small businesses were not yet ready for the changes and compliance obligations it would bring.
“If the timeframe is not extended, a period of chaos could ensue as businesses try to fulfill their compliance obligations through a system that potentially can’t deliver,” CPA Australia said in a media release.
Employers must make superannuation guarantee (SG) contributions quarterly but this will change on 1 July 2026, a year after the SG rate has changed from 11.5% of ordinary time earnings to 12%.
Call for changes
Concerned about the design of the new SG charge and the operation of the Payday Super regime, the group also said:
- Seven calendar days was an unreasonably short time for employers to allocate contributions to members’ accounts without a shortfall.
- The planned repeal of the ‘approved clearing house’ definition detracted from the broader issue of clearing houses' role in the payment process.
- The proposed design of changes to the maximum contribution base and the operation of the employer shortfall exemption certificate were impractical and required further urgent consultation, and
- The absence of a power for the Commissioner to partially, or fully, remit penalties was inconsistent with ensuring they were proportionate and properly reflect the nature, extent, and specific circumstances of non-compliance.
The group, including the Australian Bookkeepers Association, Chartered Accountants Australia and New Zealand, the Financial Advice Association of Australia, the Institute of Certified Bookkeepers, the Institute of Public Accountants, the SMSF Association and The Tax Institute lodged a joint submission to the Treasury about Payday Super.
Webb said the superannuation transmission network, which was fundamental to Payday Super's success, would not be ready to manage the increased traffic until July 2026.
“If it is not adequately prepared for the transition it would create a perfect storm of confusion and uncertainty for both employees and employers,” Webb said.
Support from Big Super
However not surprisingly this is not a view shared by large industry super and profit-for-member funds, which want the Labor Government to legislate Payday Super in the first 100 days of the new Parliament, which reconvenes on 22 July.
The legislation is likely to be passed not only in the House of Representatives, where Labor has a large majority after its 3 May landslide election victory, but also in the Senate with the support of the Greens, as together they command 56 of the 76 seats.
The Super Members Council (SMC), which represents industry, the public sector and corporate profit-to-member funds, said “the scourge of unpaid super is growing” and affecting one-in-four Australian workers.
“Crucial Payday Super reforms must be an urgent priority for the new Parliament to meet the promised start date of 1 July 2026,” said the SMC, whose members manage $1.6 trillion on behalf of 12 million people.
SMC says the other priorities of the 48th parliament should be:
- Lifting the Low-Income Super Tax Offset for 1.2 million low-paid Australians
- Expansing financial advice access for millions of people preparing to retire
- Support for ending age discrimination in super, and
- Preventing family violence perpetrators from inheriting their victims’ super.
This view was supported by another peak body in the super industry, Association of Super Funds of Australia (ASFA), which welcomed Federal Treasurer Jim Chalmers’ announcement today of a significant funding boost to implement Payday Super.
Chalmers announced an additional allocation of $404.1 million over four years from 2024-05 to implement the measures.
ASFA CEO Mary Delahunty called Payday Super a “game-changer”.
“This reform means workers will see their super build in real-time alongside their wages,” Delahunty said.
“It will mean less lost super and better outcomes in preparation for retirement. We are sure that this change will encourage people to engage more regularly with their retirement savings.”
ASFA estimated that a 25-year-old median income earner receiving quarterly super payments would be $6,000 better off in retirement than receiving fortnightly super contributions.
