Latest news with #payday super
Yahoo
15-07-2025
- Business
- Yahoo
ATO reveals $5.7 billion superannuation issue costing millions in retirement: 'Stamp out'
Australians are losing $5.7 billion in retirement savings each year due to employers not paying their superannuation entitlements correctly, new analysis of Australian Taxation Office (ATO) data has revealed. The huge losses have sparked calls for 'payday super' reforms to be passed when parliament returns this month. About 3.3 million Australians missed out on superannuation entitlements, averaging $1,730, in the 2022-2023 financial year, Super Members Council analysis of taxation data found. The amount of super going unpaid increased by $600 million from the previous year, with workers now losing $110 million each week. More than one million people were underpaid super in New South Wales at an average of $1,760, more than 848,000 in Victoria at an average of $1,670, and more than 679,000 in Queensland, missing out on an average $1,720. RELATED Aussie cafe owner's 'pressure' of impending $124,000 superannuation change NAB, ANZ slash interest rates as lenders move despite RBA cash rate hold: 'Not a coincidence' ATO tax return warning for 2 million Aussies over dangerous act Payday super reforms will mean employers are required to pay their employees' superannuation at the same time as their salary and wages. Under the current rules, it only has to be done quarterly. The reform, first announced in May 2023, is due to come into effect from July next year. However, it has not yet been legislated by the government. Super Members Council Deputy CEO Georgia Brumby said any delays to the law would mean less money in retirement for Australians, which means "less money to pay the bills after a lifetime of hard work". 'The sooner this legislation is introduced and passed, the more time and certainty it will give businesses and the super payment system to prepare — so all workers can get paid their super on time and in full,' she said. 'Payday super will not only stamp out unpaid super — it'll put nearly $8,000 more in the average Australian's pocket at retirement, thanks to more frequent payments and the power of compounding.'Leading accounting bodies have been calling on the government to delay the planned start date of the legislation. CPA Australia, CA ANZ and the Tax Institute said they all support the plan but have argued the July 1, 2026 date is 'unreasonable' and 'should be deferred for, ideally, 24 months, but at least 12 months'. They have argued the payment of super is more complex than wages and involves clearing houses, payment gateways and super funds. Employers will be given a seven-calendar-day deadline from the payment of wages to pay superannuation. If this is missed, they will be liable for an updated super guarantee charge which would include the shortfall, daily interest and an extra enforcement charge. In November, the ATO revealed its actions had led to $932 million in previously unpaid super reaching the retirement accounts of 797,000 employees in the past year. The ATO noted that more than 92 per cent of super entitlements were paid without the need for ATO intervention. Employees can check their super account via myGov to see what super payments have been paid into their funds. If you suspect your super hasn't been paid in full, on time and to the correct fund, the ATO recommends checking with your employer and your nominated super fund. You can report unpaid super to the ATO.
Yahoo
11-07-2025
- Business
- Yahoo
Aussie cafe owner's 'pressure' of impending $124,000 superannuation change: 'Everyone's struggling'
An Australian cat cafe owner says the introduction of payday super will 'add another layer of stress' to his small business, which is already grappling with rising rents, wages and operating costs. From July 1 next year, superannuation will be paid to employees at the same time as their salary and wages, rather than quarterly. First announced in May 2023, the reform is aimed at tackling unpaid super and increasing the retirement savings of Aussies. The Australian Taxation Office (ATO) estimates that $5.2 billion worth of superannuation went unpaid in 2021-22, while the government found a 25-year-old whose super was switched from quarterly to fortnightly could be $6,000 better off at retirement. Daniel McGowan runs the Lucky Cat Cafe in Ipswich and employs three part-time staff members. The 37-year-old told Yahoo Finance he was speaking with his accountant about how he can meet the upcoming superannuation requirements. He may have to reduce the hours of his staff and work behind the counter more himself to make sure he can juggle the added "pressure" on cashflow. RELATED $500,000 superannuation 'crisis' exposed as Aussie mum reveals retirement shortfall $1,130 ATO bill 'shock' after Aussie makes common tax return mistake Centrelink alert for 240,000 Aussie families as some see popular payment stopped 'I need to have that cashflow right here and now to put into the business to go straight into superannuation,' he said. 'I don't think this is going to hurt staff in that they're going to get less hours. But it is a consideration now, and I've spoken to them about it." McGowan said he generally doesn't pay himself a wage from his business, or pay himself superannuation, as he also works in digital marketing and teaches at a university. McGowan recently closed his Annerley cafe and has now shifted operations over to his Ipswich store and is in the process of building it back up. 'The way it is now is every single week is a new experience of, 'Where am I going to get this money? How am I going to pay this? How am I going to pay that?' It is a big struggle,' he said. McGowan said rent was his biggest expense, eating into between 60 to 70 per cent of revenue. This was followed by wages, with wages increasing on July 1 in line with minimum wage requirements and the super guarantee increasing to 12 per cent. The cost of goods has also been rising, with coffee bean prices 'going up every single month". On top of that, McGowan said he had to close the shop for a week due to Cyclone Alfred earlier this year, and the shop experienced a break-in. 'I just think everyone's struggling, so a week of revenue is actually a really big thing in the scheme of things,' he said. 'Anyone who wants to give you credit or a loan, these small business loan companies, they want to give you very short-term loans. 'So you're getting in this cycle of having to get a 20-week turnaround loan, which is high interest, to cover the fall, and it's a lot of juggling.' McGowan said he doesn't want to put up prices for customers at the cafe and cat lounge. He has been trying to keep prices steady for customers and absorb some of the small costs like alternative milk and EFTPOS fees. Employment Hero, who runs payroll for more than 300,000 businesses, surveyed its customers and found 65 per cent of small and medium businesses thought payday super would have a 'moderate' to 'huge impact' on the day-to-day running of their businesses. About a third said they would have to build up larger cash reserves to prepare for the change, while 15 per cent were not aware of the changes at all. Employment Hero CEO Ben Thompson said he supported the intent of payday super and thought it presented a 'huge opportunity' for all Australians, but there were risks for businesses at play. The company's modelling found businesses would need an extra $124,000 in working capital on average to meet the new rules. This is based on the average employer size and the average employee salary on its platform being paid 12 per cent of their salary in superannuation under the new timing requirements. 'That reduction in working capital could really push businesses to the edge of insolvency and put jobs at risk,' Thompson told Yahoo Finance. 'I think the problem here is more frequent payment of super is beneficial, but if it ultimately costs jobs, is it worth it?' As part of the payday super change, employers will have a seven-calendar-day deadline from the payment of wages to pay employees' superannuation. If they miss this deadline, they will be liable for an updated super guarantee charge, which will include the shortfall, daily interest (currently 10.78 per cent), and an extra enforcement charge of up to 60 per cent of the shortfall. The Council of Small Business Organisations of Australia (COSBOA) said it supports the principle of payday super but has argued businesses need more time before enforcing a strict seven-day rule. It called for a phased approach to payday super, moving to monthly payments from July 1, 2026, to allow time for system upgrades. 'Super payments move through multiple banking and clearing house stages before reaching super funds,' COSBOA Chair Matthew Addison said. 'At present, payments can take several business days to clear, and many transactions require additional time to reconcile.' Thompson has called for the payment deadline to be extended to 10 days to accommodate the likelihood of bouncebacks. The company is also in the process of building superannuation payments into a payroll solution. Other groups, like the Association of Superannuation Funds of Australia, have noted employers have known about the changes since 2023 and have had time to prepare. McGowan said he feels like he should have started preparing for the July 1 deadline earlier, but ultimately understands why the hard headline is in place. 'We're just gonna have to get it done,' he said.
