Chartered accountant GAIL FREEMAN tests out the quirks of the payroll program for payday super, which started this month.

Payday super started on July 1. For employers, this means that every time staff are paid, so is their superannuation.

It doesn’t cost any more than it did when super was paid quarterly, but it represents a change in cash flow timing, which may create problems for some businesses.

I have been testing payday super for the last six months and generally find it straightforward. The payroll program does the calculations and provides a file for you to send money to the relevant funds. However, there are some questions that arise from time to time.

In the case of high-income earners, the maximum contributions base is now $270,830. This equates to the new maximum contribution of $32,500.

If you are employed by the one employer only that employer ceases to contribute once $32,500 has been paid to the superannuation fund. However, if you have multiple employers, the situation is different. You must apply for a superannuation guarantee opt-out exemption certificate.

To do this you nominate one or more of your employers who will pay your superannuation guarantee and the ATO will exempt the other employers from paying it. It is prudent to apply for this exemption in good time to ensure that the amount paid does not exceed the maximum.

Any employer who makes a mistake when paying super should contact their payroll company for help to fix it.

When I finished paying super last week, the super file was not there for me to make the payment. I rang the payroll provider and it appeared that there had been a problem at the ATO.

The payroll provider was able to walk me through the program so that I could pay it on time. It was nothing I’d done, the file was sitting there, but I was unable to access it. 

If the problem is accidentally overpaying an employee’s super, do not pay less next time. Pay the correct amount next time and talk to the payroll provider about the process to obtain the refund of overpaid contributions.

For anyone with a total super balance (that is all superannuation balances when added together) exceeding $3 million, there is now an additional 15 per cent tax on the proportion of earnings that exceeds the threshold.

The ATO calculates it, known as division 296, when returns are lodged. It is levied on the person and not on the fund. Although they can elect to have the tax paid from the superannuation balance.

For a balance that exceeds $10 million, there’s an extra 25 per cent tax on the earnings. 

Anyone with more than $3 million in superannuation, I recommend that they contact an adviser as quickly as possible to take any relevant steps. The $3 million and the $10 million figure are both indexed annually in line with inflation.

If your total superannuation balance is less than $500,000 on July 1 2026 there is a carry forward concessional contribution up to a maximum figure advised by the ATO that represents the amount of superannuation cap not used in the last five years. This can provide a tax deduction and help grow super faster. Once the super exceeds $500,000 on July 1, this option is closed.

If you need any information on superannuation or taxation, contact the expert team at Gail Freeman & Co Pty Ltd on 02 6295 2844, email [email protected] or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

News all day, every day at CityNews.com.au.