Payday Super, Div 296 changes to revive tax landscape activity

With the introduction of Payday Super to Parliament and a refreshed approach to Division 296, the tax landscape is looking more appealing for practitioners and professionals in terms of induced conversation around tax and the need for reform.

Prior to the two significant announcements made at the beginning of the month, the tax landscape was relatively quiet with a lack of action or conversation around the crucial topic in the aftermath of the Economic Reform Roundtable in August.

Lee-Ann Hayes, Accurium tax trainer and co-host of the Under the Hood podcast, said now that these two topics had been introduced to the tax space, it was “really nice to have something meaty to talk about”.

Hayes noted that the introduction of Payday Super was, of course, highly anticipated and expected as it was a budget announcement in the 2023–24 federal budget.

“We’ve sort of known that this alignment of the payment of super to salary and wages has been on the horizon. We got a couple of consultations and we then got an exposure draft legislation. So, it’s really nice to actually see where we’re going,” she said.

“When we did have the Bill introduced into parliament there were a couple of changes from the earlier iterations, with the most welcome probably being the move to the timeframe when super must be paid to the employee.”

According to Hayes, and as recently touched on by Accountants Daily, the tax community was impressed with the altered proposal of seven business days being the allocated time period, instead of the originally proposed seven calendar days.

“That makes it a lot easier to comply with. There were also some transitional rules, but I don’t want people to get too excited that that means we’ve got this time frame to adopt the legislation. We don’t, and that'’ very clear when we get to the Commissioner’s guidance as well,” Hayes said.

“But what the transitional rules will do is just deal with the allocation of contributions for certain things within the measures. For example, there’s a couple of little tweaks in there with respect to how we calculate our offset and how you can sort of allocate your contributions to past failings, or whether you can bring them forward.”

Overall, Hayes shared her professional view that this would be difficult to implement for employers, yet was a positive change for the super industry.

“It’s not anything different, it’s just we have to do it more frequently. The flip side of that for employees is money is going into super quicker. So, the industry funds are probably loving this,” she said.

“They’re getting a lot more money in, perhaps quicker. And I guess we’ve got more opportunities to identify if our employers are actually falling foul of their super obligations.”

The Division 296 backflip the government also made at the beginning of the month was very much welcomed among the tax trainer community, according to Hayes, based on the fact industry feedback had been taken into account by the government.

Similar to the majority of the commentary from industry members and bodies, Hayes said one of the biggest criticisms levied against the original Division 296 tax was the objective to tax unrealised gains.

However, now that the welcome changes had been announced, Hayes added it would be interesting to see how this played out and if further changes were made to the proposed legislation.

“You’ve always got to look at the specifics. Obviously, it’s good news, but let’s just wait until we see the legislation early next year, then we’ll probably have a lot more to say about it,” Hayes said.

“So, like Payday Super, this will be a topic we will continue talking about because it is likely there will be more changes made.”