Various groups have urged the Federal Government to postpone its plan to roll out the Payday Super regime for up to two years to give the superannuation industry and small businesses sufficient time to meet the new requirements.
In a joint submission to Treasury this week, eight professional bodies have set out their concerns and key recommendations to ensure a smooth transition to the new model once all stakeholders are prepared.
In particular, CPA Australia, Australia’s peak professional accounting body, argued that “a period of chaos could ensue” if the timeframe is not extended, as businesses will find themselves struggling to fulfil their compliance obligations through a system that potentially can’t deliver.
Payday Super was originally set up to ensure eligible employees are paid superannuation entitlements by their employers as part of their regular pay cycle. Unless the request for a delay is granted, the scheme is due to take effect on July 1 next year.
CPA Australia’s superannuation lead, Richard Webb, said that while CPA Australia is a strong advocate for the goals of Payday Super, the superannuation industry and small businesses are not yet ready for the change and compliance obligations it brings.
“One of our main concerns is that the superannuation transmission network will not be ready to manage the increased traffic by July next year,” Webb said. “We believe it is vital to postpone the start date for Payday Super by at least a year, ideally 24 months, to allow all stakeholders sufficient time to comply with the new logistical demands on the system.
He added: “The superannuation transmission network is fundamental to the successful delivery of Payday Super. If it is not adequately prepared for the transition, it would create a perfect storm of confusion and uncertainty for both employees and employers. The practicalities of delivering once-in-a-generation reform of the infrastructure underpinning the superannuation payments system are extremely challenging.”
Webb added that the weight of expectation on small businesses is another good reason to delay the rollout.
“The new regime will be challenging for some big businesses, but small businesses will be particularly impacted by the change. The regime requires considerable upfront cash flow and system changes, posing difficulties for small businesses that may lack the resources and technological proficiency to adapt swiftly,” he said.
Webb pointed out that while advisors and accountants can help ensure a smooth transition to the Payday Super, they will need the time to support and educate their millions of small-business clients on the new scheme.
“The government should introduce a grace period to allow employers to receive education and support without immediate penalties for non-compliance. Delivering Payday Super reliably, fairly and without unintended consequences must be the priority,” he concluded.
