In an effort to reduce wage theft and prevent losses in retirement income for many Australians, the government is seeking to legislate its payday super measure, as first proposed in the 2023–2024 Federal Budget. As the first step, a consultation paper has been released which proposes two models that could be used to implement the measure.

Unpaid superannuation is equivalent to wage theft and is detrimental to the retirement income of many Australians. That’s why the government proposed measures to reduce the structural drivers of unpaid super guarantee (SG), including increasing the payment frequency of SG to occur at the same time as when salary and wages are paid (payday super), and increasing the ATO’s data matching capabilities to target SG compliance.

The consultation paper proposes two models that could be used to implement the payday super measure: the employer payment model and the due date model. Under both models, the SG charge, which is currently designed for quarterly payments, will need to be updated to align with a more frequent payment schedule. Essentially, the SG charge is a penalty that applies if an employer does not pay an employee’s SG amount in full, on time and to the right fund.

Under the employer payment model, it’s proposed that the SG charge would be based on a requirement that the employer make the payment of an SG contribution on payday, and where a payment is not made, the employer would become liable to pay the SG charge from that date (ie nominal interest would be calculated from this date). The ATO will be required to make reconciliations between the STP (Single Touch Payroll) and Member Account Transaction Service (MATS) data to ensure that the correct amount of super has been received by an employee’s super fund.

For the due date model, the current model of the SG charge would possibly be retained, with an employer becoming liable to pay the SG charge if their employee’s super contribution is not with their fund by a specified due date. Contributions would need to be received by a super fund within a certain number of days following an employee’s payday.

Regardless of the model used, the ATO will use enhanced reporting by employers and funds to ensure that super payments have been paid on payday or received by the funds by the due date. It will then initiate SG charge assessment through compliance activities more frequently, with lower reliance on and need for cases to be raised through employee notifications.

Based on the outcomes of the consultation, the government will redesign the super compliance framework to incorporate payday super, which is proposed to commence from 1 July 2026.