Draft Law Companion Ruling LCR 2026/D1 Payday Super: qualifying earnings
Draft Law Companion Ruling LCR 2026/D2 Payday Super: eligible contributions
Draft Law Companion Ruling LCR 2026/D3 Payday Super: calculation and assessment of the superannuation guarantee charge
Draft Law Companion Ruling LCR 2026/D4 Payday Super: application and transitional provisions
The Australian Bookkeepers Association, Chartered Accountants Australia and New Zealand, CPA 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, bookkeeping, tax, financial advice and superannuation bodies in Australia. We welcome the opportunity to make a submission to the Australian Taxation Office (ATO) regarding its consultations on draft Law Companion Rulings LCR 2026/D1, LCR 2026/D2, LCR 2026/D3 and LCR 2026/D4 ((draft) LCR 2026/DX as appropriate, the LCRs, (draft) LCRs 2026/D1-D4, or the draft LCRs, as applicable). Our submissions in respect of each draft LCR are made together in this submission.
We acknowledge the significant effort undertaken by the ATO to provide guidance ahead of the commencement of Payday Super. We support the policy objective of improving the timeliness of compulsory employer superannuation contributions and recognise the importance of clear administrative guidance in supporting employers and payroll providers through this transition.
Notwithstanding this, we have material concerns about the practical operability, consistency and clarity of the four draft LCRs when read together. Across the draft LCRs, we have identified a number of areas where key concepts are difficult to interpret, terminology is used inconsistently, or the guidance assumes levels of system capability or employer visibility that do not exist in practice. These issues are compounded by the interaction of the draft LCRs with existing ATO guidance, payroll processes, fund infrastructure constraints and the onerous penalty framework under Payday Super.
We also note strong concerns across the sector that the core message of Payday Super – that superannuation is required to be paid at the same time as earnings, but not necessarily by a different method – has not been communicated clearly or consistently across the draft LCRs. There remains a widespread misconception that Payday Super requires employers to change how they pay superannuation, rather than when it is paid. Clear and repeated messaging in the final rulings that existing payment methods (including clearing houses – notwithstanding the closure of the Small Business Superannuation Clearing House (SBSCH) – and direct fund payments) remain unchanged, would materially reduce confusion and unnecessary system change.
It is important to ensure that the closure of the SBSCH is kept in perspective. This will affect around a quarter of a million employers, and the closure will require affected employers to necessarily make new arrangements ahead of the Payday Super start date. Any messaging that adopts a minimalist tone which may reflect the experience of larger employers may be somewhat contrary to the experience of smaller employers.
In our view, the combined effect of these issues creates a real risk that well‑intentioned employers may inadvertently fail to comply with their obligations, or take actions that worsen their compliance position, despite acting in good faith. This risk is most acute in relation to contribution timing, allocation mechanics, the operation of the maximum contributions base, exemption certificate the treatment of fund‑level outages and the application of penalty uplift provisions. Without further clarification, there is also a risk of inconsistent interpretation and implementation across payroll systems, advisers and employers.
Accordingly, our submission focuses on identifying specific areas where the draft LCRs would benefit from clearer drafting, additional examples, stronger signposting to related ATO publications, and more explicit explanations of administrative intent and limits. Our objective is to support the ATO in finalising guidance that is not only technically accurate, but also practically workable and capable of being applied consistently by employers at scale, thereby promoting compliance with, and confidence in, the Payday Super regime.
Our detailed response to the draft LCRs is contained in Appendix A.