Login
iscover
The proposed design of payday super will see businesses hit with super guarantee charges due to factors entirely outside their control, BDO has cautioned.
Newsletter
Regulation of clearing houses missing in payday super design, warns BDO
14 October 2024
•
12 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
BDO tax partner Mark Molesworth has said while the government and employees clearly would like super to be paid promptly, some aspects of the design of the payday super regime require further thought.
Molesworth said while he has no issue with the concept of payday super and the requirement for the employer to pay super every payday, the requirement that the contribution must be received by the employee's super fund within a seven-day period will be challenging in some cases.
The only exception is for new employees, in which case employers will have 14 days to get the contribution into the super fund.
"There are lots of reasons why a seven-day period to have the money in the hands of the fund is going to be really difficult for employers," Molesworth said.
"For example, an employee who changes funds and gives notice about a new choice of super fund and happens to deliver that notice close to a pay date or get the details wrong on the form.
"It may not be physically possible to make the contribution to the new fund and have it in the fund within seven days. Also, the first time that you'll find out that the employee's given you the wrong details will be when the contribution bounces back from the fund and then suddenly you haven't got the money in the hands of the fund."
==
==
Molesworth said at that point it would be the employer's problem and they would be in super guarantee charge territory straight away.
The proposed design relies heavily on systems and access to the internet and banking systems at both the employer and recipient ends running smoothly.
Outages of any form would create significant issues with how payday super is intended to operate.
"You don't have to think that far back to periods either the NBN, Optus or the banks have gone down. Suddenly, you'll still be stuck with this seven-day period," Molesworth said.
"There's no ability to stick your hand up and say 'Well that was outside of my control, how can I be expected to have got the funds into the hands of the superannuation fund within that period?'"
Molesworth said there was nothing to regulate clearing houses in the new proposed design, which meant the risk of clearing houses not processing the superannuation money for employees fast enough fell back on the employer.
The shutdown of the ATO's Small Business Superannuation Clearing House on 1 July 2026 coinciding with the beginning of the payday super would also further exacerbate issues in the system, he warned.
"This means there will no longer be a clearing house where payment to the clearing house is counted as payment to the super fund anymore and we are in no way, shape or form regulating clearing houses under this regulation," Molesworth said.
Molesworth said the proposed design fails to consider many of the significant changes the superannuation system has gone through since it was established in the early 1990s.
"It doesn't allow for the fact that we now have a choice of super, we now have electronic payments which weren't there in 1993 and we now have the existence of clearing houses," he said.
"If you really want to strip the Superannuation Guarantee system back to its basics and bring it into the 21st century, you would surely change the legislation so that the payment to the clearing house was treated as payment to the fund. You would then regulate the clearing houses so [that they are required] to make the payment to the fund within a certain period.
"That would make a lot more sense in the context of the current regulatory settings."
You are not authorised to post comments.
Comments will undergo moderation before they get published.