With the 2023 Federal Budget fast approaching, the government has been selectively releasing various measures ahead of time. Two particular announcements set to affect businesses consist of payday super and the small business energy incentive. While more details on these measures are likely to be released in the Budget, businesses of all sizes can benefit from early preparation.
The government announced that from 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages (ie payday super). This 3-year lead time is to give businesses, super funds, payroll providers and other parts of the superannuation system sufficient time to prepare for the change.
According to ATO estimates, in 2019-20, around $3.4bn worth of super went unpaid. While the onus to chase up unpaid super currently lies with the employee, this is made all the more difficult by the employer only having to show the amount of super they are liable to pay, not the actual amount paid. Currently, employers are only required to pay super for eligible employees on a quarterly basis, meaning that many employees realise that they have not been paid the correct amount of super far too late.
The ATO notes that it will generally not pursue unpaid super enquiries where the compliant is for a period that ended over 5 years ago.
Once the employee notices that they have not been paid the correct amount of super, recovery can be an onerous process of providing relevant evidence to initiate an investigation with either the ATO or the Fair Work Ombudsman. As evidenced by the amount of estimated unpaid super each year, many unscrupulous business owners will have either abandoned or liquidated the business by this point, leaving employees with nothing.
While some eligible employees will be able to claim unpaid wages and annual leave under the Fair Entitlements Guarantee, super guarantee contributions cannot be claimed, leaving employees, particularly those in casual, part-time or lower-wage sectors, worse off in retirement. The government hopes that the simple payday super change will make it easier for employees to keep track of their super payments, making it harder for disreputable employers to exploit this loophole.
The Treasurer, Jim Chalmers MP, noted that more frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books, while also benefitting employees. It is projected that a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5% better off at retirement just with this small change.
To complement the payday super measure, the government has also announced that the ATO will receive additional resourcing to help detect unpaid super payments earlier. New enhanced targets will also be set for the ATO for the recovery of super payments. Jointly, the Treasury and the ATO will commence consultation on these changes in the second half of 2023.
It should be noted that legislation related to these measures have not yet been released, let alone passed Parliament. Therefore, these measures are not yet law, but given the broad political support in wake of the announcements, it is likely that these proposals will be introduced as soon as various consultation concludes.