Submission on Draft Law Companion Rulings on Payday Super
In brief:
- Material concerns about the practical operability, consistency and clarity of the four draft LCRs when read together
- It is important to ensure that the closure of the small business super clearing house (SBSCH) is kept in perspective
- Strong concerns across the sector that the core message of Payday Super – that superannuation is required to be paid at the same time as earnings, but not necessarily by a different method – has not been communicated clearly or consistently across the draft LCRs.
We along with six other associations jointly made a submission to the Australian Tax Office (ATO) on Law Companion Ruling (LCR) 2026/D1 on Payday Super: qualifying earnings, 2026/D2 on Payday Super: eligible contributions, 2026/D3 on Payday Super: calculation and assessment of the superannuation guarantee charge, 2026/D4 on application and transitional provisions.
We acknowledge the significant effort undertaken by the ATO to provide guidance ahead of the commencement of Payday Super. We support the policy objective of improving the timeliness of compulsory employer superannuation contributions and recognise the importance of clear administrative guidance in supporting employers and payroll providers through this transition.
Notwithstanding this, we have material concerns about the practical operability, consistency and clarity of the four draft LCRs when read together. Across the draft LCRs, we have identified a number of areas where key concepts are difficult to interpret, terminology is used inconsistently, or the guidance assumes levels of system capability or employer visibility that do not exist in practice. These issues are compounded by the interaction of the draft LCRs with existing ATO guidance, payroll processes, fund infrastructure constraints and the onerous penalty framework under Payday Super.
In our view, the combined effect of these issues creates a real risk that well‑intentioned employers may inadvertently fail to comply with their obligations, or take actions that worsen their compliance position, despite acting in good faith. This risk is most acute in relation to contribution timing, allocation mechanics, the operation of the maximum contributions base, exemption certificate the treatment of fund‑level outages and the application of penalty uplift provisions. Without further clarification, there is also a risk of inconsistent interpretation and implementation across payroll systems, advisers and employers.
"In our view, the combined effect of these issues creates a real risk that well intentioned employers may inadvertently fail to comply with their obligations, or take actions that worsen their compliance position, despite acting in good faith."
Submission on PS LA 2026/D1 and PS LA 2026/D2
ATO’s stated objective of promoting timely and accurate reporting and draft penalty framework.
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