Australia Employment News

New reforms require employers to pay superannuation on payday

Eliza Sayon May 2, 2023

2 min read

The Australian Government has announced reforms that will require employers to pay superannuation on payday rather than quarterly, addressing the issue of unpaid superannuation across the country.

While it is currently required to pay the superannuation guarantee of 10.5% on top of employee wages every quarter, the new reforms will take effect in July 2026 to give employers enough time to prepare.

According to Industry Super, the time gap between payday and super contributions allows unscrupulous or bankrupt employers to evade super payments, making it challenging for regulators to enforce.

As a result, the total amount of unpaid super has reached a staggering $29bn in the last six years. The Australian Taxation Office (ATO) also reported an estimated $3.4bn worth of super unpaid in 2019-20.

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Treasurer Jim Chalmers and Minister for Financial Services Stephen Jones announced that the reforms will help strengthen the country’s superannuation system and provide better retirement benefits to workers.

“More frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books,” Minister Jones said.

“Payday super will also make it easier for employees to keep track of their payments, and harder for them to be exploited by disreputable employers.”

To combat unpaid superannuation payments, the ATO will receive extra resources to detect these payments earlier such as establishing higher targets for the ATO to recover unpaid super.

The Treasury and ATO will collaborate on the changes in the latter half of 2023, and they will be implemented by July 2026.

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According to The Guardian, ATO Commissioner Chris Jordan informed the Senate that the collection of super is a “structural issue” because many businesses become insolvent by the time the ATO tries to collect payments.

“This is a terrible situation, no doubt in the world. This is money that employees lose,” he said.

The Australian government is planning to introduce a law against wage theft in late 2023, and it will include the payment of superannuation. This change was well-received by employers, including the Australian Chamber of Commerce and Industry.

Eliza Sayon

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Eliza is a content producer and editor at Public Spectrum. She is an experienced writer on topics related to the government and to the public, as well as stories that uplift and improve the community.