What Strata Managers need to know.
This article outlines the upcoming "payday super" changes, which will require strata management businesses and buildings with employee caretakers to pay superannuation guarantee (SG) on payday rather than quarterly from 1 July 2026. Below, we outline what these changes mean for you and the buildings you oversee.
The New Payday Super Obligation:
Currently, superannuation guarantee payments are made quarterly, but this will shift to a payday system starting 1 July 2026. As a strata manager, this change will apply to any employees within your business as well as caretakers or other workers employed by the strata schemes you manage. Employers will need to ensure that super contributions are paid within seven days of an employee receiving their ordinary wages.
The government has introduced this reform for two main reasons:
- To reduce the $3.4 billion shortfall between what is owed to employees and what has been paid in super.
- To improve retirement savings outcomes for employees, with the government estimating that a 25-year-old worker could be around 1.5% better off at retirement if super is paid on payday rather than quarterly.
Though not yet law, preparations for the transition are advised as the Treasury has already released preliminary guidance.
Impact on Cashflow and Compliance:
or strata management businesses and managed buildings with caretakers, the most significant impact will likely be on cashflow. Under the current system, you may hold up to 12% of your payroll for super contributions until the quarterly payment deadline. With payday super, this flexibility disappears, and payments will need to be made more frequently.
This could mean your business and any managed strata schemes will need to adjust financial practices to accommodate the more immediate outflow of super funds. It’s important to review cashflow systems now to avoid any issues with non-compliance down the track.
Fortunately, the transition may be simplified by existing systems like Single Touch Payroll (STP), which many businesses already use to report wages and super. Adjustments to STP will include ordinary time earnings (OTE) data to facilitate timely super payments.
Late Super Payments = Heavier Penalties
Payday super will maintain the strict penalties currently in place for late SG payments, with some added measures to discourage non-compliance. If super contributions are not paid on time, your business or the buildings you manage could face a super guarantee charge (SGC), which will include:
- Outstanding SG shortfall: Based on ordinary time earnings (OTE).
- Notional earnings: Daily interest on unpaid super, calculated at the general interest charge rate.
- Administrative uplift: An additional charge of up to 60% of the SG shortfall to cover enforcement costs.
- General interest charge: Interest accrued on unpaid SG amounts, including penalties.
- SG charge penalty: Up to 50% of the outstanding unpaid SG charge if it is not settled within 28 days of the notice of assessment.
This stricter penalty regime highlights the importance of staying on top of SG payments. Businesses that fail to pay super on time or misclassify employees as contractors could quickly find themselves facing escalating debts. However, one potential relief is that under the proposed law, the new SG charge will be tax-deductible (excluding penalties and interest accrued after the 28-day deadline), which is not currently the case.
Preparing for Payday Super
While payday super is not yet law, it’s important to start planning for its introduction. This change will affect both your strata management business and the buildings you manage with employee caretakers. Reviewing payroll systems and cashflow practices now will ensure a smooth transition when the new rules come into effect.
Quick Takes:
- From 1 July 2026, SG payments will be required on payday, not quarterly.
- This applies to your own employees and any caretakers employed by managed strata buildings.
- Strata management businesses and schemes will need to manage cashflow to handle more frequent super payments.
- Penalties for late payments will be higher, but the SG charge will become tax-deductible (excluding penalties and interest).
For more information, or to discuss options for the properties you manager, please contact the Ascend office.
Links:
- Single Touch Payroll (STP) FAQs
The above content is of a general nature and should not be relied upon as professional advice. Ascend encourages readers to seek advice from suitably qualified professionals in relation to their specific circumstances and not to rely solely on the information provided above. Please contact our office for more information.
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