Payday super – exposure draft legislation
The Australian Bookkeepers Association, Chartered Accountants Australia and New Zealand, CPA Australia, the Financial Advice Association of Australia, the Institute of Certified Bookkeepers, the Institute of Public Accountants, the SMSF Association and The Tax Institute (together, the Joint Bodies) write to you as the peak professional accounting and tax practitioner bodies in Australia representing the tax profession, the superannuation sector and financial advisers. We welcome the opportunity to make a submission to the Treasury regarding its consultation on the package of exposure draft legislation on payday super (PDS).
The package of draft legislation released on 14 March 2025 comprises:
- Treasury Laws Amendment Bill 2025: SG reforms to address unpaid super (the draft Bill);
- Superannuation Guarantee Charge Amendment Bill 2025 (draft Imposition Bill);
- Treasury Laws Amendment Bill 2025: ban on advertising super funds during onboarding (draft Advertising Ban Bill);
- accompanying explanatory materials (draft EM);
- Treasury Laws Amendment Instrument 2025: SG reforms to address unpaid super (draft Regs); and
- accompanying explanatory statement (draft ES).
In the development of this submission, we have closely consulted with members of the Joint Bodies who have specific knowledge, experience and expertise in taxation, superannuation and, specifically, the superannuation guarantee (SG) regime.
The Joint Bodies broadly support the Government’s proposed policy of introducing PDS. The introduction of PDS would get SG contributions into employees’ superannuation accounts sooner and take important steps towards addressing the SG gap, which was $5.2 billion in 2021–22 alone. We also regard the reforms as an opportunity to address the harshest aspects of the existing SG regime, and make it fairer and easier for employers to meet their obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA).
It is pleasing to see that many of the recommendations we made in our joint submission dated 8 November 2023 on the consultation paper titled ‘Securing Australians’ Superannuation’ have been incorporated into the design of the new SG charge, including the proposed:
- removal of the SG statement;
- removal of the current $20 per employee per quarter administration component;
- alignment of the earnings base for calculating the SG shortfall with the base used for calculating the SG;
- notional earnings which are proposed to apply for only the period that SG contributions remain unpaid;
- deductibility of the SG charge; and
- SG charge late payment (LP) penalty that proportionately increases with culpability.
However, we have concerns about some design aspects of the new SG charge and the operation of the PDS regime. These concerns include the following:
- the proposed start date of 1 July 2026 is unreasonable and should be deferred for, ideally, 24 months, but at least 12 months;
- the window of seven calendar days for SG contributions to be allocated to members’ superannuation accounts without employers having an SG shortfall is unreasonable and should be a longer period;
- the proposed repeal of the definition of ‘approved clearing house’ detracts from the broader and more important issue of the role played by clearing houses in the payment process, which requires further consideration;
- the proposed design of the changes to the maximum contribution base and the current operation of the employer shortfall exemption certificate are impractical and require further urgent consultation;
- the absence of a power of remission for the Commissioner to partially or fully remit penalties is inconsistent with the objective of ensuring that the imposition of penalties on employers is proportionate and properly reflects the nature, extent, and specific circumstances of an employer’s non-compliance.
Our detailed response and recommendations are contained in Appendix B.
We would be pleased to work with the Government to further discuss the points raised in our submission. The Joint Bodies can provide the Government with access to the range of tax technical and industry experts who have contributed to our submission.
We look forward to engaging with you further in the next stage of this consultation process.