With the move to Payday Super upon us, most of the focus has been on how the change will affect employers, but there are also a few considerations for employees worth paying attention to.

 

potential unintended excess contributions

 

In the first year of Payday Super, some employees could effectively receive up to 15 months of super contributions in the 2026–27 financial year.

This is because the June 2026 quarterly super payment isn’t due until 28 July 2026, and employees will also receive a full year of Super Guarantee contributions under the new Payday Super system.

There will likely be an option to request this to be reallocated, but this is an extra step in the process, and there has been no formal confirmation of these options at this stage.

 

super timing for high income earners

 

Currently, the Super Guarantee cap is calculated on a quarterly basis, but under Payday Super, this will move to an annual contribution cap.

This means higher income earners could receive most of their employer contributions earlier in the financial year, with little or no additional contributions later in the year.

It may also create the potential for going over the contribution limits if someone changes employers during the year, as each employer applies the annual contribution cap separately.

The impact of this could include additional tax at marginal tax rates and Div293 excess contributions tax, resulting in the super contributions being taxed at a higher rate.

This can also have a timing impact on cashflow for your super fund, especially when in an SMSF.

 

switching super funds

 

The timing of switching your super fund could also matter. For example, if an employee changes jobs during the year.

Ideally, employees may want to make sure their new super fund is set up and provide those details to their employer before closing their existing account, to avoid the next Payday Super contribution being paid into the old fund.

 

employees with SMSF’s

 

For employees with SMSFs, Payday Super introduces a number of additional practical considerations.

With contributions moving from quarterly to each pay cycle, SMSFs are likely to receive smaller, more frequent contributions. This can increase administration requirements, including more frequent reconciliation and allocation of contributions, and may lead to higher accounting or administration costs over time.

Accurate fund setup also becomes more important. Employers rely on correct SMSF details, including bank account information and the fund’s electronic service address [ESA].

With contributions occurring more frequently, any errors in these details could result in repeated failed or misdirected contributions.  This also means that a simple change of bank account within an SMSF requires the additional and immediate action of updating your employer!

From a contribution monitoring perspective, SMSF trustees may need to pay closer attention to contribution caps, particularly in the first year of transition or where there are multiple employers or variable income streams.

There may also be investment implications. More frequent contributions can result in higher levels of cash sitting in the fund if investments are not made regularly, which could impact overall returns.

Trustees may wish to review how contributions are invested and whether their current processes remain appropriate under a more frequent contribution environment.

 

For many employees, these changes won’t create immediate issues, but they are still worth keeping in mind.

 

we’re here to help

Super changes don’t happen often, but when they do, they matter.

If you’re unsure how these changes might impact your super contributions, or want to avoid unintended issues, reach out to me, your usual contact at businessDEPOT.

 

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general advice disclaimer

Business Depot Financial Planning BNE Pty Ltd ABN 27 644 561 400 and its advisors are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL No. 357306.

The information provided on this website is a brief overview and does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.