Welcome to the new financial year! Today is an important day for all employers as the new rules for paying super commence. Although we are all (hopefully) prepared, with our myob or xero software ready to go, there are few potential trip hazards I have set out below that you need to be aware of. Employers – please read them.

In addition, all employers need to lodge the STP year end finalisation reports now, and adjust pays for the increase in the minimum wage and some awards that start today. The super guarantee of 12% stays the same. However, the concessional cap has increased to $32,500. Those salary sacrificing to max this cap will need to adjust their salary sacrifice amounts.

As business owners, the Payday Super changes will force you to think about cashflow as super payments are effectively being brought forward by a quarter. Please ensure you have taken this into account in your planning.

On to the potential traps ………….

When you pay super, the ATO allocates payments to the oldest outstanding super first. Let’s assume you have not paid the June quarter super, as it is not due until the 28th. If you run an additional pay run before 28 June and pay the super for the new pay run immediately, that payment will be set off against the June amount not the new payroll. Technically you will have failed to pay the new super on time. So you really need to get that June quarter super paid before running the first pay of FY27.

Under the new rules, you have 7 days after the pay run “payment date” to get the super into their fund. As the clearing houses can take some time, the only safe option is to action the super payment (via your software) at the same time you run the the pay. It is vital that when running a pay you check the payment date (that is autogenerated by the software) and change it if necessary to the physical date of payment. If this date is more than 3 or 4 days prior, your super will inevitably be late. The software providers direct debit your business bank account so you need to ensure their are adequate funds available. It is not possible to pay superfunds directly.

For those of you who have in the past been stating the payment date of a pay run is the last day of the prior month (for accounting reporting or PSI purposes), to continue doing this the pays now need to be actioned and the super paid by about the 4th of the month.

If a super payment bounces, for example due to incorrect fund details or the employee having an SMSF that is non-complying, it is the employer’s responsibility to reissue the payment to the correct fund, or open a new account for the employee and put it there. All within the 7 day time limit. Fines and penalties will be automatically generated for late payments.

When you lodge the STP report for a pay run, the ATO is looking to match the expected super for each pay. If no super arrives the ATO will issue assessments, fines, interest and penalties. There is no change to the fact that directors are in the end personally liable for unpaid super – even if they have nothing to do with actioning pay.

These rules apply even if you are the only employee of your own company. The more pay runs you do, the more likely you are to have a slip up – so those on weekly or fortnighly pay cycles might like to negotiate monthly pay cycles with their employees to reduce risk. Of course this is subject to any awards or contracts in place.

As ever, if you have any questions please get in contact. I guarantee you will not be the only one struggling! We are finding that the use of screen sharing (which we simply set up for you from our end) is very helpful with software queries. It is quicker in the long run to just ask!

Lindsay