Tips for meeting the Payday Super timeframe
Under Payday Super, contributions must be received by an employee’s super fund within seven business days after payday.
To keep on track, the ATO recommends that employers:
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use the new member verification request (‘MVR’) to verify that an employee’s super fund details are valid and that the fund can accept a contribution before it is made;
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check with the relevant payroll provider or clearing house that the fund is responding to MVRs;
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monitor payments, as funds have three business days to allocate or reject a payment; and
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if a payment is rejected or returned, act quickly to correct any errors and resubmit to the correct fund.
For new employees, or where an employee changes their fund, employers generally have 20 business days to make the initial contribution.
Editor: The ATO has stated that employers who genuinely try to comply will not be the focus of its compliance action during the first year of Payday Super.
Payday Super and independent contractors
The ATO is reminding businesses that Payday Super changes when super contributions must be paid, not who is entitled to receive them.
Businesses generally need to pay super where they engage an independent contractor mainly for their labour, personal effort, skills or time.
This can apply even if the contractor:
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has an ABN;
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invoices the business for their work; or
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is described as a contractor in a written agreement.
Where an independent contractor is entitled to super, the contribution must be paid for each payday and reach their super fund within seven business days after payday.
It is not mandatory to report payments made to independent contractors through Single Touch Payroll (‘STP’). However, if a business reports them voluntarily, it must meet the STP reporting requirements, including reporting qualifying earnings and super liability information.
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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
