A cohort of industry bodies has called for greater certainty around the operation of the transitional rules the ATO will adopt in the first year of the Payday Super regime noting the regulator is legally bound to act in some circumstances.
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 jointly made the request in a submission to government made in mid-June but released this week.
Pointing to the ATO’s “Practical Compliance Guideline (PCG) 2026/1 – Payday Super”, which outlines its risk-based compliance approach for the first year of the new regime, the joint bodies recognised the regulator will rely more on administrative tolerance than legal certainty.
“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 (superannuation guarantee) shortfall arises, the Commissioner remains bound to apply the law,” the submission stated.
“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.”
As such, the joint bodies proposed a number of specific measures to apply during the transition period of the 2027 financial year including the ability for the ATO to remit penalties in some circumstances.
“We recommend that, during FY2027, the Commissioner be provided with clear discretion to fully or partially remit penalties where the employer has taken reasonable steps to comply; any non-compliance is minor or short-term; and issues are corrected within a reasonable period after the employer became aware or should have become aware of the issue once identified,” the submission noted, adding employers should have a safe harbour for delays outside their control.
The joint bodies also called for recognition the transition to Payday Super may result in more than 12 months of contributions being recorded in the 2027 financial year, leading to unintended excess contributions outcomes, and PCG 2026/1 provides no assistance or relief from excess contributions tax for employees.
To address this issue the submission recommended the ATO provide guidance for this scenario noting the Commissioner already has the discretion to disregard or reallocate excess contributions in other circumstances.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason