Could this be a vital consideration in your next cash flow forecast?
From 1 July this year the Australian Taxation Office (ATO) will require superannuation guarantee contributions to be paid with each pay cycle.
This, combined with closure of the Small Business Superannuation Clearing House (SBSCH), increases cash flow pressure and compliance risks for Australian businesses.
Therefore, to avoid penalties and potential insolvency, it’s vital business operators who haven’t done so, make immediate plans to accommodate the new regime by updating their payroll systems and adjusting cash flow forecasts.
Furthermore, if yours is a business that’s been relying on the SBSCH free service, its cessation means you’ll have to consider alternatives immediately -- for example payroll integrated systems or commercial providers. (For details check out Payday Super on the ATO’s website.)
Why we care
For decades Macks Advisory has seen what can happen to clients who procrastinate in the face of inevitable regulatory change. We assume most of our newsletter readers would be aware of the impending changes referred to here, but we nevertheless worry it’s once again the case that too many are freezing like rabbits in a spotlight, unaware of what delay in accommodating these changes can cost them.
If you’re a business owner, failure to prepare for what is about to happen could cost you penalties and interest charges for late payments. It could also result in Superannuation Guarantee Charge (SGC) liabilities, and risk insolvency because of unmanaged cash flow shocks.
The cash flows of small businesses accustomed to quarterly super payments seem most likely to have their cash flows disrupted by the new Payday Super reforms that will require real-time compliance for weekly, fortnightly, or monthly super contributions.
Business owners who haven’t prepared for the 1 July 2026 changes, should do so immediately.
- Review cash flow forecasts to accommodate your pay cycle, with particular attention to liquidity risks.
- Be sure your payroll software can process super contributions concurrently with wages so that you can comply with SuperStream requirements.
- If you’re using the SBSCH referred to earlier, select and implement an alternative solution to avoid disruptions.
- To ensure the smooth running of your business, it’s essential you brief staff on these changes and undertake tests of modified systems before 1 July.
The reform’s win-win aspects
Clearly the reforms will benefit employees. The requirement for employers’ payday payment means employees will benefit from receiving their superannuation entitlements promptly, and on retirement less likely to be victims of unpaid entitlements.
However, at the same time businesses can improve cash flow management with the newly required smaller, regular, more easily managed superannuation payments, rather than previously much larger quarterly payments.
This will help business operators to budget more effectively and thus many businesses may avoid a build-up of unmanageable liabilities that result in insolvency.
The reforms will allow businesses to streamline payroll processes by integrating superannuation payments into their payrolls rather than having to handle them separately under a quarterly deadline.
The new regime makes it easier for the Australian Taxation Office (ATO) to detect and recover unpaid superannuation before opportunities to do this are no longer available (for example, if a business is forced into liquidation or for some other reason ceases to exist).
It also means business owners who have been meeting their tax obligations will no longer be disadvantaged by competitors who haven’t.
Hundreds of business owners, by not meeting superannuation and tax obligations, have been undercutting prices of competitors who do the right thing, thus forcing them out of business.
Looking at the ATO’s published draft of a practical compliance guideline outlining its planned approach to administering the reforms in the financial year 2026-27, it’s Macks Advisory’s opinion there will be a focus on education and assistance for employers who make genuine efforts to comply, but concurrently also prioritising enforcement against those who consistently fail to meet their obligations.
How bad are insolvency numbers?
During and since the pandemic and global financial crisis the media have been busy reporting that businesses have been going bust in record numbers, laying much of the blame at the feet of governments because of their tax and red tape regimes.
But we question not only the quantifying term “record”, but whether in fact insolvency numbers quoted are altogether as bad as they’re said to be.
It’s of course disturbing to read a newspaper report that 14,000 Australian businesses entered insolvency in the 2025 financial year, a 33% rise on the previous year, compared to under 5,000 that collapsed in 2022.
The article goes on to make the point that insolvency rates were artificially low during COVID and that economists attribute the spike in insolvencies in recent years to the removal of government support programs.
It’s claimed the officially notified insolvencies represent only “the tip of the iceberg”. Reality, is that many owners, failing to restructure their businesses have simply walked away from them.
We’re sure all newsletter readers would agree such newspaper stories are common, but we believe there’s a bigger and surprisingly optimistic picture here worth revealing – which we’ll do next month.
So, watch this space.
