Q+A: Payday super is coming: what every small business needs to know
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What is the main topic discussed in this episode?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer. The move to payday super from July 1 is one of the biggest changes to the superannuation system in decades, requiring employers... to pay super at the same time as wages rather than quarterly. For big businesses, that's probably manageable, but for many small and medium-sized businesses, it could mean major changes to payroll, cash flow, and the compliance process. So are SMEs actually ready for payday super?
What is payday super and why is it important for small businesses?
Richard Webb is superannuation lead at CPA Australia. Richard, welcome to Fear and Greed Q&A. Thank you, Sean, and it's good to be here.
I'm guessing you've been pretty busy. Yeah, Sean, it's probably fair to say that the last couple of years have been truly eye-opening for me. It's been an absolute immersion process, I think, in the whole payroll process and how it relates to superannuation and And I've learned a lot. And certainly, I'm hoping I can share some of that with the listeners today.
I'm not sure that I want to get stuck next to you at a barbecue for too long though, Richard, but we'll see how we go. Firstly, just explain what Payday Super is.
Okay. So the whole idea of Payday Super is, I guess, to do a couple of things. And certainly, one of the things that it is designed to do is to make sure that employees get their deferred remuneration in the form of superannuation paid at the same time as their immediate remuneration, which is the salary and wages that goes into their nominated bank account. But the second part of that is that it should theoretically allow the ATO to keep a much closer eye on the problem of unpaid or underpaid superannuation. So you'll probably be aware that there's around about $3 billion in unpaid super each year, and that can affect about 3 million Australians. And from what we understand, there is roughly around about, I guess, on average, and this is across the whole economy, not just for those who are unpaid or underpaid, that can be in the realm of around about $1,700, $1,800 a year that they're missing out on.
So by having the ATO in a position where they can keep a closer eye on what it is that employers are paying employees, in the form of their superannuation, whether it's making it through on time, the ATO is in a much better position to actually be a little bit more proactive about the problem of unpaid or underpaid superannuation. It is something that does require an entirely new mindset with regards to how employers go about paying their employees.
How will the transition to payday super affect payroll processes?
And then certainly there will be teething problems with that. But what we think is that it's a great move all round. And for those employees who are joining the workforce and wondering why it takes so long to receive superannuation contributions, that problem will, I guess, go away. Okay. So are SMEs ready for it, particularly in a cash flow sense? So SMEs are going to need to do a lot of things that I think they're not necessarily in the same position as large business. So for large business, I think if you talk to a lot of them, for starters, I think for large business, generally, we sort of hear that people are on total remuneration packages. And by total remuneration packages, what that quite often means is that, and they'll very easily say, look, I don't have to do anything.
Are small and medium-sized enterprises (SMEs) prepared for payday super?
My payroll provider, who's one of the bigger operators, will just basically do it all for me and I don't have to do a thing. For small businesses, on the other hand, small businesses run their businesses in some very unique ways. And those unique ways can be, for example, where a large business might use one provider that covers their bookkeeping, their payroll, their superannuation contributions. Small businesses might choose to do things a unique number of ways where they have their bookkeeping program doing one thing. They might have a payroll program linked to the bookkeeping program that does something else. And then they might manually actually trigger the superannuation data payload to go off to the clearinghouse who they deal with directly.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:06–0:41
2
What is payday super and why is it important for small businesses?
0:41–2:46
3
How will the transition to payday super affect payroll processes?
2:46–3:34
4
Are small and medium-sized enterprises (SMEs) prepared for payday super?
3:34–12:21
Speakers
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