Payroll & Superannuation

New Criminal Underpayment Laws have Started

BAS Agent's Blog, Payroll & Superannuation / By / / , , , , / 3 minutes of reading

New Criminal Underpayment Laws began on 1 January 2025. It is now an offence to underpay your staff. If found guilty, you may face hefty fines or jail time, or both. Read on to find out what these laws mean and how you can avoid a conviction going forward.

What are these laws?

Employers found to be intentionally underpaying staff by Fair Work, will be investigated. If a case can be raised, it will be referred for criminal prosecution. If an employer is convicted, he/she may face prison time and/or fines (see below).

Employers who have made an honest mistake and did not intend to underpay staff, will not be prosecuted.

How to protect yourself

Fair Work has created the Voluntary Small Business Wage Compliance Code. This Code can be used to check if you are paying your staff correctly. Employers who have complied with the Code in relation to an underpayment, cannot be referred for possible criminal prosecution by Fair Work. Therefore, if you suspect that you may have underpaid staff, it is in your best interests to review the above Code ASAP!

Another way to protect yourself is to write an Cooperation Agreement. This is an agreement between Fair Work and an employer that outlines a possible underpayment event. While the agreement is in force, Fair Work cannot refer the matter for possible criminal prosecution, however, civil enforcement may apply regardless.

Which fines and prison time can apply?

For a company

If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:

  • 3 times the amount of the underpayment
  • $8.25 million.

If the court can’t determine the amount of the underpayment, the maximum fine is $8.25 million.

For an individual

The court can impose a maximum of 10 years in prison or a fine, or both.

If the court can determine the amount of the employer’s underpayment, the maximum fine will be the higher of:

  • 3 times the amount of the underpayment
  • $1.65 million.

If the court can’t determine the underpayment, the maximum fine is $1.65 million.

How to avoid all of the above

Simple really! Good employers do two things:

1. Stay up to date with payroll obligations including changes to awards, legislation and employees’ circumstances such as their roles, duties, classifications, relevant qualifications, age, hours of work or location of work.

2. Reach out to reliable sources for help when difficult payroll situations arise. These may include bookkeepers, tax agents, payroll HR associations, payroll processing services, industrial associations and Fair Work.

If you are reading this and are concerned about your situation, now might be the time to reach out to your tax professional and ask for assistance. Fair Work mean business!!

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PayDay Super is Coming

BAS Agent's Blog, Payroll & Superannuation / By / / , , / 2 minutes of reading

Payday Super is coming! Payday Super aims to stop employers from not paying employees super or paying it late. The premise is that super will need to be paid after each pay run, even termination pay runs. Payday Super is set to begin from 1 July 2026.

Two proposed models for Payday Super implementation are:

  1. “Employment payment” model: Employers must pay SG contributions on the same day as wages.
  2. “Due date” model: SG contributions must reach the superannuation fund within a specified time after payday.

Both depend on the definition of “payday,” which includes any payment with an ordinary time earnings component, even outside the regular pay cycle like termination payments or bonuses. SG contributions would be calculated based on the ordinary time earnings paid on payday.

Payday Super will have specific impacts on the Super Guarantee Charge process and the maximum contribution base calculations. The government will consult with key stakeholders and the public to ensure these impacts are minimal.

The Government will finalise the Payday Super framework in the 2024–25 Budget. Legislation will be introduced for the measure set to begin on 1 July 2026. The ATO is consulting and co-designing with digital service providers for implementation.

In the meantime, employers must consider how Payday Super will affect their payroll processes and cash flow. It is also important to note that by July 2026, the super rate will be 12% which will also impact business cash flow. There are lots of issues to consider here and I will keep you updated as more information about Payday Super comes to hand.

Note: The government has released draft legislation to mandate payday super, a policy that was first flagged in the 2023-24 Federal Budget.

You can view the draft legislation here.

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ATO Super Clearing House to Close when PayDay Super Begins

BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 2 minutes of reading

You may have heard that Payday Super is coming in July 2026. In short, Payday Super will require all employers to pay their employees’ super on the same day as a pay run is processed. The main reason behind this measure is that the Government wishes to end non-payment and underpayment of super by some employers as this is effectively wage theft. The measure will also mean that millions of employees will receive higher retirement savings due to their super contributions being paid earlier and more frequently.

What you may not know is that from 1 July 2026, the ATO Small Business Super Clearing House (SBSCH) will close. Yes, you heard right—it is closing its doors at the same time as Payday Super begins.

So, what can you do to prepare if you are a current SBSCH user? Your options are limited. You can either move to your default super fund’s clearing house or use the super functionality in your payroll software, such as Xero, MYOB, or QBO. I recommend not waiting until the SBSCH closes to get this organised. Make the change as soon as practicable.

How did I hear about the SBSCH closing? I read the fact sheet from the Government Treasury website. You can access the fact sheet here if you wish to read the details behind Payday Super.

The fact sheet breaks down many other details about Payday Super and is an important read if you are an employer. I suggest you take the time to review it and figure out how you will apply this change to your payroll processes when the time comes.

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Super to be paid on Paid Parental Leave

BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 1 minute of reading

Good news has arrived for those planning a family in the next year or so. The government has decided to pay super guarantee equivalent payments on government-funded Paid Parental Leave (PPL). This will begin from 1st July 2025 i.e. for any babies born or adopted on or post this date. This measure is now law.

While Services Australia will continue to facilitate the PPL process, the ATO will be responsible for paying the super component (not employers). The ATO will pay the super in a lump sum at the start of the following financial year at the then super rate of 12% plus any interest owing. The first payments will be processed in July 2026.

This is a step forward in ensuring that those who choose to be stay-at-home parents are not disadvantaged in terms of future retirement savings. This is a good thing! A fairer system for all!

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New from Xero: reprocess failed or returned auto super payments

BAS Agent's Blog, Payroll & Superannuation, Xero / By / / , , , / 2 minutes of reading

Xero users who use the payroll function will be pleased to hear that an update has been released whereby failed or returned super payments can now be reprocessed.

Failed Auto Super Payment

If a super payment has failed, the payment authoriser will receive an email notification, outlining the reason for the failure. The status of the payment will change from “pending processing” to “failed”. When this happens, the payment can be reprocessed as the batch will become available for selection in the “Add Super Payment” screen again. Details of the steps required to reprocess failed payments can be found in the above link.

Returned Auto Super Payments

As for failed payments, the authoriser will receive an email if a super payment is returned with information about which employees are affected. Xero can’t tell you why the payment was returned so you will have to contact the super fund affected to obtain those details.

In Xero, the payment status will change to either “partially returned” or “returned”, depending on how many employees are affected.

To find out how to reprocess returned auto super payments, go to the link above.

My Thoughts?

I think this update is an improvement overall, however, the following details from the above link about the timing of the status change to “failed”, have me a bit concerned:

‘This can take up to five business days, with further delays during peak processing times, such as at the end of a quarter. While waiting for the failure message, you can’t update the status of the batch manually.’

Given that the ATO states that “contributions are considered ‘paid’ when they are received by the super fund not when they are paid to the commercial clearing house”, the delays as described by Xero could trigger a Super Guarantee Charge requirement depending on the payment dates involved. This will adversely affect the employer and his/her cash flow, given the SGC increases the super liability overall. This seems a little unfair especially if the employer did pay the SG in a timely manner (or thought he/she did!).

I guess, the only remedy here is to ensure that SG is paid as early in the month as possible so that if any payments are returned or fail, they can be rectified well before the super payment cut-off dates. This issue will become null and void of course, when Payday Super begins (I hope!).

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Casual Employment Rules have Changed!

BAS Agent's Blog, Payroll & Superannuation / By / / , , , , / 3 minutes of reading

On Monday 26th August 2024, changes to casual employment laws came into effect.

The changes include a new definition of a casual employee and a new pathway for employees to convert from casual to permanent employment.

Please note employees who are casual before the 26th of August, will remain casual under the current definition unless they choose to transition to full-time or part-time (permanent) employment.

New Casual Definition

A person will be a casual employee if:

  • there isn’t a firm promise of ongoing work and
  • he/she is entitled to a casual loading or casual pay rate under an award, registered agreement or employment contract.

Employees who begin as casuals will remain as casuals until their employment status changes either through a conversion process or by accepting alternative employment under a different status.

Casual Conversion – Employee Choice Pathway

There will be a new pathway for eligible employees to change to full or part-time employment. This will replace the current rules for changing to permanent employment and will be known as the  “Employee Choice Pathway”.

Under the new rules, eligible casual employees can notify their employers in writing of their intention to change to permanent employment. Employers can only refuse the notice for certain reasons (see below).

Casual employees can apply to move to permanent employment if:

  • they have been employed for at least 6 months (12 months if a small business) and
  • they believe they are no longer casual employees.

Employers must discuss this potential change to employment with the casual employee before committing to any change. The details of the changes must be worked through via this discussion. Then, employers must respond in writing within 21 days either accepting the change or not accepting it.

There are only a few reasons why a request to move to permanent employment can be rejected. These include:

  • the employee still meets the definition of a casual employee
  • there are fair and reasonable operational grounds that would negatively impact the business. Read more here about this here.
  • the employer is bound by a recruitment or selection process required by law and accepting the request would mean he/she is no longer compliant.

The current casual conversion rules will continue to apply to employers and casuals employed before 26th August 2024 for a transitional period. See those details here.

Reminder! Casual Employment Information Statement

There is a new statement to hand to all casual employees when they begin work. It must also be provided after 12 months of employment (small business employers) and for other employers, after 6 and 12 months, and then after every 12 months of employment. Download the statement here.

For further details about the changes to casual employment rules, go to the Fair Work website.

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Why has my PAYG Withholding Cycle Changed?

BAS Agent's Blog, Payroll & Superannuation / By / / , / 2 minutes of reading

If you’re an employer, your PAYG withholding (PAYGWH) cycle might change depending on how much you withheld in the prior financial year. The ATO will advise you about this change in April each year via a written letter. The cycle change will occur on 1 July of the next financial year.

As a small withholder (small employer) you pay PAYGWH with GST and other taxes in your quarterly BAS. But, the ATO can switch your PAYGWH to monthly if, in the last financial year,

you withheld $25,001 to $1,000,000 from employee wages

These employers are called “medium withholders”.

If that’s you, you must lodge and pay a monthly Instalment Activity Statement (IAS) by the 21st of each month. For example, PAYGWH for July is due by August 21st.

If you withheld over $1 million last financial year, you’re a “large withholder”. 

Large employers have specific dates to pay PAYGWH and get special payment reference numbers (PRN). The ATO will provide you with these details. Remember, large withholders don’t report PAYGWH on their activity statement, but they should still match up their reported STP and paid amounts.

If the ATO changes your PAYGWH cycle, update your payroll software to meet the new deadlines.

If you think your PAYGWH for the next financial year will be below the thresholds mentioned above, you can ask to stay on your current PAYGWH cycle. You must do this within 14 days after getting the ATO’s letter about the cycle change. Complete this form and send it to the ATO (or your tax agent can help).

For more info, check out the ATO Annual Review of PAYG Withholding Cycles on the ATO website.

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Wage Theft Legislation is Coming! Review your Payroll Now!

BAS Agent's Blog, Payroll & Superannuation / By / / , , / 2 minutes of reading

On 1 January 2025, Wage Theft Legislation will be enacted. This legislation is part of the Federal Government’s “Closing Loopholes” laws which effectively change the Fair Work Act.

Wage Theft Legislation will make it a criminal offence to underpay wages deliberately. Penalties could be $7.825 million or more for a company and $1.565 million or more for an individual and/or 10 years in prison. The Fair Work Ombudsman will be responsible for investigating possible wage theft cases.

These are very hefty penalties indeed. No one wants to be at the pointy end of these new laws therefore, in my opinion, reviewing your payroll set-up now and ensuring it is completely compliant, would be a good idea. To that end, conducting a payroll audit is necessary.

How to Audit Your Payroll Set-up

A payroll audit includes a review of payroll practices, systems and outcomes, all underpinned by complex regulations that vary at the federal, state and territory levels. It looks at employee classifications, pay rates, entitlements, and record-keeping.

The Fair Work Ombudsman has provided a step-by-step guide to auditing your payroll. You can download it here. The guide assists in reviewing payroll records, assessing the findings and finally, providing solutions for any issues raised.

Further to the above guide, the Australian Payroll Association recommends taking these 5 steps to assist with the audit process:

  1. Engage a Specialist – a payroll specialist can review your current set-up and identify any gaps or areas of risk that require addressing.
  2. Educate your Team – make sure your team is across the new Wage Theft Legislation. Provide training and education in any areas of payroll legislation in which your team are lacking.
  3. Leverage Technology – Modern payroll systems help avoid non-compliance issues. If your payroll technology is outdated or not up to par with Australian requirements, consider upgrading to a system that automates calculations and processes for better compliance.
  4. Document Everything – Ensure all payroll processes are well-documented and records are meticulously kept to prove compliance, aid transparency, and defend your organisation in disputes.
  5. Regular Reviews – Once your payroll is fully compliant, ensure regular payroll audits are conducted to catch and correct any discrepancies before they create significant issues.

With the introduction of Wage Theft Legislation, employers are encouraged to be proactive and conduct a thorough payroll audit to ensure compliance. Doing this now, and making it a regular process going forward, will ensure that employers are well-placed to avoid becoming embroiled in criminal proceedings and potential sanctions.

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    Which of the Three Fair Work Information Statements do you need to give to your employees? One or all three?

    BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 3 minutes of reading

    Once upon a time, there was only one Fair Work Information Statement (FWIS). But now there are three of them! As an employer, you need to know which one to give to your employees. This could be only one depending on your employment situation, or all three. But before we look at the three statements, let’s quickly revisit the background of the FWIS for those who may not be across it.

    The FWIS provides information to new employees about the conditions of their employment, including details about the National Employment Standards. The FWIS must be given to new employees before or as soon as they begin working for you.

    3 Fair Work Statements

    As mentioned above, there are now three statements. Let’s look at each one separately.

    1. The Fair Work Information Statement. This is the most well-known statement as it has been around for some time now. The FWIS has information on:

    • the National Employment Standards
    • right to request flexible working arrangements
    • modern awards
    • making agreements under the Fair Work Act 2009
    • individual flexibility arrangements
    • freedom of association and workplace rights (general protections)
    • termination of employment
    • right of entry
    • the role of the Fair Work Ombudsman and the Fair Work Commission.

    2. The Casual Employment Information Statement. The CEIS has information about:

    • the definition of a casual employee
    • when an employer has to offer casual conversion
    • when an employer doesn’t have to offer casual conversion
    • when a casual employee can request casual conversion
    • casual conversion entitlements of casual employees employed by small business employers
    • the role of the Fair Work Commission is to deal with disputes about casual conversion.

    Employers aren’t required to give casual employees the CEIS more than once in any given 12-month period (for example, if an employer employs a casual employee temporarily at different stages in one 12-month period, they only need to give them the CEIS once. However, it should be noted that large employers (15 or more employees) must give the CEIS to employees every 6 months. Still, small employers (15 or fewer employees) must provide the CEIS every 12 months on the anniversary of each employee’s start date.

    3. The Fixed Term Contract Information Statement. The FTCIS has information about:

    • what a fixed-term contract is
    • limitations on the use of fixed-term contracts
    • exceptions to the limitations
    • how to resolve disputes about fixed-term contract limitations and exceptions.

    How to Give these Statements to your Employees

    Fair Work states that you may provide these statements in a variety of ways:

    • in person
    • by mail
    • by email
    • by emailing a link to this page of their website
    • by emailing a link to a copy of the FWIS available on the employer’s intranet

    Depending on the employment status of your employees, you may need to provide the FWIS only. However, if you employ a mix of employees i.e. full-time, part-time, casual, and/or fixed-term contract, it may be necessary to provide all three statements as described above. Remember, providing the FWISs is not optional – it is compulsory. Failure to do so may incur penalties – see here.

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    Think you can get away with not paying your employees’ super? Think again!

    BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By / / , , , , , / 3 minutes of reading

    Employers intentionally not paying their employees’ super has always been a bugbear of mine. If you follow my Twitter (X) account, you may have seen the hashtag I use: “#notyourmoney“. I use this hashtag because I believe that employee superannuation is not your money and never will be and I want to enforce this concept. These irresponsible employers anger me. It is completely wrong to hire people and then fail to fulfill the contract you agreed upon, which includes paying their super. In my opinion, not paying super is equivalent to stealing.

    In the past, employers were able to get away with this unacceptable behavior because the Australian Taxation Office (ATO) only found out about it when employees reported them. At that point, the ATO would investigate, audit, and penalise these employers. This reactive approach has resulted in an estimated $2.5 billion shortfall in unpaid super. This is a truly disgraceful situation.

    But things are about to change…

    In the 2023-24 Federal Budget, it was announced that the ATO will receive $40.2 million for super compliance measures. This funding includes $27 million for data matching capabilities to identify and take action on cases of Superannuation Guarantee (SG) underpayment, as well as $13.2 million for consultation and co-design.

    So what does this mean? Who/what will the ATO be data matching with?

    Firstly, it is now widely known that the ATO receives payroll data from employers through Single Touch Payroll events (STP). This data includes the superannuation amounts owed to employees’ super funds. The ATO also receives information about employees’ super from the Australian Prudential Regulation Authority (APRA) through the Member Account Transaction Service (MATS). MATS is a reporting service used for more frequent and detailed reporting of member super contributions and transactions. The ATO utilises the information from both sources to identify potential non-compliant behaviour by employers.

    With increased funding from the budget, the ATO will intensify data-matching activities between STP and MATS. This shift from a reactive to a proactive approach means that the ATO will be able to initiate audits themselves instead of relying on employees to report non-compliance after the fact.

    It is important to note that this data-matching activity is not new. It has been ongoing since 2019, with the ATO reporting a 24% increase in investigations of super non-compliance. What is new is the improved data matching capabilities enabled by better technology and more comprehensive STP data.

    The ATO is now more focused than ever on addressing super non-compliance. They have the necessary tools and resources to conduct investigations and audits on a large scale.

    This makes me feel more positive about this problem. I sincerely hope the ATO succeeds in its efforts. I have a strong aversion to employers who think they can evade paying super. It is essentially stealing, a white-collar crime. Thanks to the ATO’s real-time monitoring, the likelihood of getting away with non-payment of super is rapidly decreasing. And that is a very good thing!

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