The Council of Small Business Organisations Australia (COSBOA) has raised serious concerns over recent changes to the superannuation payment system, warning that small businesses will bear the brunt of increased administrative and financial burdens.
COSBOA's concerns follow the announcement by the Assistant Treasurer regarding the outcomes of consultations on the proposal to bring superannuation payments forward to every pay cycle, rather than the current quarterly payment requirement.[1] The government argues that this change will benefit superannuation members by ensuring more timely contributions to their accounts. However, COSBOA believes this policy will have dire consequences for small business owners and employers.
COSBOA CEO Luke Achterstraat explained, “The proposed shift to pay day super contributions significantly increases the administrative burden on small businesses.
“Employers will be required to make up to 13 times as many payments, handle up to 13 times as many transactions, and ultimately incur up to 13 times the cost to ensure super reaches their employees accounts under this new arrangement. This is an overwhelming ask, particularly for small businesses already struggling with tight margins.”
The policy change also comes with the closure of the ATO-managed Small Business Superannuation Clearing House, which previously offered a no-cost solution for 250,000 small employers to help them meet their superannuation obligations and pay super contributions for their employees in one transaction, regardless of the number of funds they contribute to. This closure leaves many small business owners uncertain about how to manage their super obligations going forward. For those using payroll software with integrated payment services, the new requirements will likely lead to an increase in software costs that businesses cannot easily absorb.
Meanwhile, there is a further concern that super funds and payment gateways will continue to earn interest while holding onto super contributions for up to 7 days before allocating them to members, a process that many employers find unfair.
“This change appears to overlook the reality of running a small business,” says Achterstraat.
“Not only will employers face increased payroll management costs, but they could also be penalised for delays that are entirely outside of their control.”
“We call on the government to reconsider this policy reform, to implement an option for small business to pay their super monthly, and remove penalties for employers that have instructed the bank to send the super payment. It is not the employer’s fault if others in the chain can’t process promptly.”
“Small business is the backbone of the Australian economy. Imposing additional costs and compliance requirements on them will only serve to undermine their ability to thrive and support their communities,” added Achterstraat.
COSBOA is urging the government, parliament, and opposition parties to commit to reconsidering this revised payday super policy to protect small businesses from further financial strain. In the current economic climate, the focus should be on supporting small businesses, not increasing their administrative and financial burdens.
For more about COSBOA, visit: www.cosboa.org.au
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For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call +61 (0) 433 644 097.
For comment on Payday Super please contact Matthew Addison, Chair, COSBOA on chair@cosboa.org.au or call +61 (0) 421 553 613.
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