The introduction of Payday Super from 1 July 2026 marks a significant shift in Australia’s superannuation landscape, requiring employers to pay superannuation guarantee (SG) contributions at the same time as salary and wages. In response to the Australian Taxation Office’s (ATO) draft Practical Compliance Guideline PCG 2025/D5 (“the draft PCG”), Australia’s leading professional bodies including Chartered Accountants Australia and New Zealand have provided a submission aimed at ensuring fairness, clarity, and practical support for employers navigating these changes.

Understanding the ATO’s Compliance Approach

PCG 2025/D5 outlines a risk-based compliance framework for the first year of Payday Super, categorising employers as low, medium, or high risk based on their efforts to comply with SG obligations. Employers who make genuine efforts to pay SG contributions on time and promptly correct errors will generally be considered low risk and not subject to compliance action until 30 June 2027. However, those with unresolved SG shortfalls may face investigation. The Joint Bodies highlight the need for greater clarity and a more generous transitional period, given the scale of operational, legislative, and technological changes required.

The Joint Bodies emphasise that small business entities will be disproportionately impacted by the changes, particularly those currently using the Small Business Superannuation Clearing House

Key Recommendations for a Smoother Transition

The submission sets out practical recommendations to strengthen the compliance framework and support employers:

• Extend the transitional compliance period: Apply the PCG compliance approach for 24 months (1 July 2026 – 30 June 2028) or commit to reviewing after 12 months, recognising the time needed for employers and third-party providers to adapt.
• Clarify assessment timing: Define  the ‘late period’ and ensure assessments for low- and medium-risk      employers do not commence prematurely, providing employers with a fair      window to address any SG shortfalls.
• Explain SG Penalty exposure: Clearly outline circumstances under which low-risk employers may still face SG penalties, including actions after June 2027
• Provide guidance on Voluntary Disclosure Statements (VDSs): Clarify how lodging a VDS affects risk categorisation and penalty mitigation, and enable VDS lodgement via payroll systems to reduce administrative burden.
• Define ‘reasonably practicable’: Offer concrete examples of what constitutes ‘reasonably practicable’ in correcting SG errors, giving employers certainty in compliance.
• Address third-party delays: Recognise  that employers often rely on software providers, clearing houses, and  super funds, and should not be penalised for delays outside their control.
• Expand relief for rejected contributions and fund transfers: we are concerned that delays in contribution processing due to events such as incorrectly rejected contributions, fund mergers and successor fund transfers will lead to employers being unfairly assigned to a higher risk category.  We recommend that the list of events such as these could be expanded in the PCG for completeness and greater certainty.
• Implement Nudge Messaging: Use Single Touch Payroll (STP) and Member Account Transaction Service (MATS)  data to proactively inform employers about SG payment timing and system performance, helping them adjust practices during the transition period specified in PCG 2025/D5.
• Align with ‘Tell-Us-Once’ approach: Avoid requiring employers to resubmit data already held by the ATO, streamlining compliance and reducing red tape.

Special Considerations for Small Businesses

The Joint Bodies emphasise that small business entities (SBEs) will be disproportionately impacted by the changes, particularly those currently using the Small Business Superannuation Clearing House (SBSCH). These employers will need to source new clearing houses and adapt to new systems, often with limited resources and expertise. The submission calls for targeted transitional assistance and practical guidance to support SBEs through the transition.

The Joint Bodies’ submission reflects a collaborative effort to ensure the Payday Super reforms are implemented fairly and effectively. The recommendations aim to help employers navigate the new regime with confidence. Ongoing dialogue and practical guidance will be essential to achieving a smooth transition for all stakeholders.