Attention all our members who are employers: be prepared for a cash flow shock when Payday Super starts on 1 July this year.

Payday Super is a new Australian Taxation Office (ATO) initiative that changes how you calculate and pay the superannuation guarantee. It's law, so there will be penalties if you don't comply.

Key points

• You must pay super on payday, not quarterly
• The super payment must reach the employee's super fund within seven business days (except when the law allows a longer time, such as for new employees)
• Super will be calculated on 12 per cent of an employee's qualifying earnings (QE), which is a new term that combines ordinary time earnings (OTE) and other payments

For all the details

The ATO explains everything in their information about Payday Super.

What you should do now

Read the PayDay Super information on the ATO link above and make sure your processes are in place. If you use a payroll provider, talk to them about it.

You may also need to talk to your accountant about how to manage the impact on your cash flow. Remember, you will be paying that extra 12 per cent every payday, not every quarter.