Employers will be required to pay the superannuation guarantee (SG) at the same time as salary and wages to employees from today, with the Payday Super regime officially taking effect.
Australia’s tranche 2 anti-money laundering and counter-terrorism financing (AML/CTF) reforms also commence today, having been passed by parliament back on November 29, 2024.
Whilst both reforms were announced over the past three years, providing businesses time to prepare, many are still unaware of the complexities of the changes and remain underprepared.
In early June,Accountants Daily reported thattwo in five Australian businesses had not yet reviewed their cash flow impact or were unsure ahead of Payday Super.
This lack of readiness can pose significant operational risks, particularly as businesses face a confluence of cost pressures including inflation, rising wage expectations, and tight working capital.
However, from an employee perspective, the payday super may prove to be overwhelmingly beneficial.
Contributions will reach the workers’ super fund earlier, giving investments more time to grow through compound returns.
Speaking to Accounting Times, Richard Webb, the superannuation lead at CPA Australia, noted that a significant benefit of the payday super reform was the convenience of tracking super.
“The introduction of Payday Super will deliver significant benefits for employees and the superannuation system,” Webb said.
“Paying super at the same time as wages will make super payments more transparent and easier for employees to track.”
Having more frequent payments to identify any missed contributions earlier is crucial in relation to the reports by Super Members Council, whichrevealed the scale of the scourge of unpaid super, finding Australian workers were underpaid a shocking total of $24.4 billion over the five years to 2023.
“More frequent super contributions will help employees build their retirement savings by reducing delays in getting their money invested,” Webb said.
“Regular contributions throughout the year can lessen the impact of short-term market movements and provide more consistent exposure to long-term investment returns.”
Even for employers, the simplified method creates a consistent payroll workflow rather than separate quarterly payment processes.
However, particularly for small businesses, issues may arise regarding higher administrative costs, as many do not have automated payroll software.
Further, a consequence is the cash outflow tensions that will arise, something that Webb identified as an inevitable implication of the reform.
“Employers will face significant implementation challenges, the change will bring forward cash outflows, creating cash flow pressures for many businesses, particularly small employers,” Webb said.
“Payroll systems, clearing houses and super funds will need to operate reliably within tighter payment deadlines.”
“At the same time, employers will face greater administrative requirements and much higher penalties for late payments.”
In what is a major first day of the new financial year, the AML Tranche 2 reform is also coming into effect today.
As reported, the AML/CTF obligations will apply to certain services typically provided by accountants, lawyers and real estate businesses, requiring businesses to develop and maintain an AML/CTF program, apply enhanced customer due diligence and comply with certain reporting obligations.
Belinda Zohrab, who is the regulations and standards lead at CPA Australia, noted that these new regulations broaden the range of businesses involved in identifying and preventing potential financial misconduct.
“Tranche 2 of Australia’s AML/CTF regime significantly increases the number and types of entities who can assist AUSTRAC in the detection of criminal abuse of the financial system and in doing so help protect Australians from organised crime and potentially terrorist activities,” Zohrab said.
“As participants in the regime, meeting the new compliance obligations means accountants in practice will know their clients better, enhance their own risk management procedures and accordingly reduce their own exposure to exploitation by criminals.”
Whilst the AML/CTF frameworks may help detect and prevent financial crime, they impose significant administrative and compliance burdens on professionals, resulting in slower transactions, more complex client onboarding, and additional costs to meet compliance obligations.
“This does come with a significant up-front cost in time and money and there are ongoing reporting and compliance obligations,” Zohrab added.
“The impact of becoming part of the regime will be felt hardest by the smaller practitioners who will most likely have to become thoroughly conversant with the regime, rather than outsource much of the compliance aspects to AML/CTF support providers.”
Whilst the two reforms promise stronger protections for employees and the financial system, success will be determined by how effectively Australian businesses adapt to the extensive compliance requirements.
Want to see more stories from trusted news sources?Make Accounting Times a preferred news source on Google.Click here to add Accounting Times as a preferred news source.
