Date posted: 09/05/2023

Federal Budget 2023-24: Compulsory employer super payments to be brought forward

Employers will need to make mandatory Super Guarantee contributions the same day they pay salary and wages, starting from 1 July 2026.

In brief

  • Super Guarantee penalties will be redesigned and announced in the next Federal Budget
  • Employers to retain flexibility when making other contributions such as salary sacrifice
  • ATO to be given $40.2 million to improve data matching between Single Touch Payroll and super fund contribution data

From 1 July 2026, employers will be required to make Super Guarantee (SG) contributions when they pay salary and wages.

This comes as a welcome measure as these contributions have always been regarded as foregone salary and wages.

However, there are not many employers that currently pay SG contributions under this proposed regime. This means most employers are going to have to adjust cashflow management to allow for this change. 

Those employers who contribute as infrequently as possible – that is, as late in a quarter as possible as allowed by the current policy settings – may find this change quite severe from a cashflow perspective.

The Government has also acknowledged that it will need to adjust the SG penalty regime which is unnecessarily harsh especially for inadvertent and infrequent breaches. The changes to this regime will form a part of the 2024 Federal Budget and we look forward to participating in the foreshadowed consultation to ensure the current unfairness is removed.

At the same time, the expanded definition of employee and the differences between salary and wages and Ordinary Time Earnings all need to be simplified.

Currently, there appears to be no policy that requires employers to make other contributions, such as salary sacrifice contributions more frequently, so current flexibility continues to apply.

As part of this policy the Government will allocate $40.2 million to the ATO in 2023-24 to improve Single Touch Payroll and super fund data matching.

As more employer contributions are expected to be made each financial year, the Government has also announced that employer tax collections will be $256.6 million lower between 2022-23 and 2033-34.

The ATO will report about compliance with these measures in the Treasury Portfolio Budget Statement this year. In broad terms it shows that the ATO expect to collect about 50% of Super Guarantee debts raised.

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