Payday Super transitional relief submission
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. The Joint Bodies write to request urgent practical and targeted transitional amendments to the Payday Super legislation.
We support the policy intent of Payday Super, and recognise the Australian Taxation Office’s (ATO) first-year administrative approach outlined in PCG 2026/1. However, we are concerned that the vast majority of employers, that, based on ATO statistics, without fanfare or complaint, regularly do their best to comply with their Super Guarantee (SG) obligations, also face being exposed to substantial penalties that are designed to apply to employers who do not want to comply with these obligations.
The current framework relies heavily on administrative tolerance rather than legal certainty.
To put this another way, employers who are genuinely attempting to satisfy their legal obligations appear to be set up to fail. Targeted and time-limited legislative refinements are necessary to ensure that employers acting in good faith are not exposed to disproportionate outcomes during the transition.
Implementing Payday Super creates many practical implementation challenges, which will arise during the transition period, in FY2027, as all entities in the superannuation system (for example, employers, payroll system providers, financial institutions, clearing houses and superannuation funds) make essential adjustments to their systems, and processes to accommodate the Payday Super landscape.
We have focused in this letter on a small number of targeted measures that address practical gaps in the current framework and avoid duplicating existing administrative approaches.
Interaction with PCG 2026/1
We acknowledge the ATO’s Practical Compliance Guideline PCG 2026/1 - Payday Super – first-year ATO compliance approach (PCG 2026/1), which outlines a risk-based compliance approach for the first year of Payday Super. PCG 2026/1 recognises the practical challenges associated with implementation, and provides a helpful administrative framework for the ATO’s prioritisation of compliance activity.
In the Press Release, issued when the Treasury Laws Amendment (Payday Superannuation) Regulations 2026 were registered on 23 February 2026, you identified certainty needed for ‘employers that, in 2026–27, they will not be the focus of ATO action if they are doing what they can to contribute each payday as system and software upgrades are rolled out’.
However, PCG 2026/1 does not alter the operation of the law or provide certainty for employers where a breach is identified. In particular, where an SG shortfall arises, the Commissioner remains bound to apply the law. While PCG 2026/1 provides administrative guidance, it does not remove the Commissioner’s obligation to apply statutory penalty provisions where a contravention is identified.
Accordingly, the measures recommended in this submission are intended to complement the ATO’s administrative approach by providing greater certainty for employers through the legislation during the transition period.
Key recommendations
To support the effective implementation of Payday Super, the Joint Bodies recommend a small number of targeted, time-limited measures focused on the transition period (FY 2027):
Priority measures
- providing legislative certainty for proportional and tailored penalty outcomes where employers act in good faith, including enhanced Commissioner discretion to remit penalties;
- introducing a safe harbour for delays outside the employer’s control; that are not captured by the existing exceptional circumstances framework; and
- addressing transitional timing issues that may result in more than 12 months of contributions being reported in a single income year, leading to unintended excess contributions outcomes.
Supporting measures
- ensuring payment timeframes appropriately reflect end-to-end processing constraints across payroll systems and intermediaries, particularly for SMEs; and
- exploring options to improve employer visibility of contribution status, during the transition period.
These measures would preserve the policy intent of Payday Super while recognising the operational realities facing employers, particularly in the first year of implementation.
Our detailed comments and recommendations are contained in Appendix A.