An industry technical specialist has highlighted the changes to the processes regarding the maximum contribution base relating to employer super guarantee (SG) obligations as a result of the introduction of Payday Super.
The maximum contribution base rules are designed to ensure employees on high salaries do not experience a breach of their concessional contribution cap in a given year solely stemming from the SG payments made by their employers.
“We have in this current year a quarterly maximum contribution base of $62,500. [That means] every quarter the employer effectively has the opportunity to cut [off] super guarantee [payments] for the employee once they hit that $62,500 on a quarterly basis because SG is paid on a quarterly basis in the current year,” Smarter SMSF technical and education manager Tim Miller told attendees of a recent SuperGuardian practitioner webinar.
“[So] from 1 July 2026, we’re moving into an annual maximum contribution base and instead of [having to use] quirky calculations using AWOTE (average weekly ordinary time earnings) and the like, [a very simplistic calculation will now be used], which is effectively the concessional cap multiplied by 10 per cent divided by the charge percentage, [which is] 12 per cent.”
Miller revealed the new formula arrives at an annual maximum contribution base of $270,830.
“What that means basically is once an employer [makes SG contributions of $270,830] next year, at that point in the year, an employer will cease [making] super guarantee [payments] or their super guarantee obligation ceases at that time.
“Of course they can continue to contribute and of course they can get the deduction for the contributions, but [they will be] creating an excess contribution situation [for that employee].”
According to Miller, the new system has simplified the maximum contribution base process.
“[I think] it’s a far better system and I like it from a Payday Super point of view and from an overall concept point of view the idea that you’re measuring income as you go along rather than on a quarterly basis I think is much smarter,” he said.
Further, he pointed out the rules for income earners with two employers making SG payments and who want one of them to cease making contributions to prevent a breach of their cap have changed as well under the new framework.
Currently individuals wanting to opt out from having a particular employer make SG payments would have to apply 60 days before the commencement of the quarter in which a potential contributions cap would occur.
The applicable time period from 1 July 2026 onwards will be 30 days before the commencement of the quarter in which a potential contributions cap would occur.
“So it’s a little more real time,” Miller suggested.
