Navigating Payday Super and financial update for Not-For-Profits

Not-For-Profit (NFP) National Leader, Elizabeth Blunt, recently hosted a webinar with experts Judy White, and Russell Postle focussing on the Payday Super reforms and their administrative and cashflow implications. Fridrich Housa covered the latest financial updates affecting the NFP sector, including key areas of focus for the Australian Securities & Investments Commission (ASIC), updates from the Australian Charities and Not-for-Profits Commission (ACNC), and the application of portable long service leave (PLSL).

Payday Super readiness and legislative updates and compliance

There’s a new Payday Super regime coming into effect from 1 July 2026 which relates to the mandatory superannuation contributions required to be paid by employers, for employees.

Instead of contributing on a quarterly basis, employers will now be required to pay superannuation on the employee’s payday. The super guarantee charge calculation and penalty system will also be changing. To ensure compliance, an employer is required to guarantee the contributions are received and capable of allocation by the employees’ super fund within the seven business day period, allowing for public holidays and weekends. For the transition period, the current due date of 28 July 2026 for April to June 2026 super will remain.

With the Payday Super regime, there is increased visibility and sophisticated data matching within the Member Account Transaction (MAT) system, allowing an increase in capability from the Australian Tax Office (ATO) to automatically issue super shortfall assessment notice.

Cash flow and practical implications for employers

The update to payment timing from quarterly to payday frequency creates an impact on organisational cash flow. In preparation for the Payday Super regime to begin, we recommend planning for cash flow implications and practising making super payments on payday now to highlight any implications that may surface for your organisation. Organisations utilising commercial clearinghouses are recommended to review their terms and agreements now, beginning discussions to understand any applicable timeframes, noting that it is the employer who will be held accountable for any non-compliance if super contributions are not cleared in time.

An additional change with the regime, will be a change to the super guarantee charge statements. These are currently formatted in a spreadsheet, but this will change to a voluntary disclosure statement, making the process more digitised. Expect further information regarding this, and changes to the way the admin fee and interest component of super guarantee charges are calculated.

The new regime should also prompt organisations to review their onboarding processes. With the new payment timeline of 20 business days in place for new employees, organisations will need to ensure they have ample time to review new employee data and first-time payments to be able to correct any issues (such as payment bounce back) within the 20 business days.

Financial reporting and sustainability update for NFPs

Although many NFP’s report to the ACNC and other regulators and not ASIC, ASIC’s focus areas are something all reporting entities should be aware of. ASIC published its findings from its financial reporting surveillance program, covering the period 1 July 2024 to 30 June 2025. The findings, contained in Report 819 ASIC’s oversight of financial reporting and audit 2024-25 (Report 819), largely highlight similar areas we saw last year.

ASIC areas of focus that are relevant to NFPs include revenue recognition, asset values, provisions, and disclosures, either within financial statements or included elsewhere within an annual report. Revenue recognition may be complex for NFPs due to the interaction between multiple accounting standards including AASB 1058 and AASB 15. Investment values and how the fair value of the investments is determined and disclosed in financial statements should be also high on the radar for NFPs, if relevant.

The ACNC’s ‘Reviewing charities’ financial information and annual financial reports’ analysis covered the 2023 reporting period and reviewed the Annual Information Statements (AISs) and Annual Financial Reports (AFRs) of 250 charities and reporting groups. ACNC reviewed 2023 reports looking at charities’ financial reporting, focusing on medium and large charities that were more likely to have made errors, it found 57 per cent of charities had material errors in their reporting, and 25 per cent of large charities reviewed made one or more key management personnel remuneration errors when completing AIS. As a result of the reviews, corrections totalling $2.8 billion in total revenue and $5.8 billion in total assets were made by charities.

The regulators’ findings highlight the need for directors, preparers, and auditors to collectively pay particular attention to these matters to improve financial reporting and audit quality. NFP organisations need to ensure they have robust position papers with appropriate analysis and conclusions to support complex and judgemental areas of accounting.

From a standard-setting perspective, the AASB’s NFP Private Sector Reporting Framework, a project to potentially limit the ability to prepare special purpose financial statements for NFPs and to introduce Tier 3 reporting requirements, is on track to be completed in the first half of 2026. The Australian Accounting Standards Board (AASB) have decided the effective date of the Tier 3 standard will be the annual reporting periods beginning or after 1 July 2029. Also relevant to the NFP organisations, the AASB will also seek feedback on its Service Performance Reporting project though the Agenda Consultation process.

Mandatory climate reporting, while not necessarily applicable to all NFPs, is an opportunity to provide Environmental, Social, and Governance (ESG) information to your staff and stakeholders, and to help attract donors in growing recognition that impact reporting, which goes beyond financial metrics to capture social and environmental outcomes, can significantly enhance stakeholder engagement. It is important to note, some NFPs will have to report mandatorily if they lodge financial reports with ASIC under Part 2M of the Corporations Act 2001, such as NFP companies limited by guarantee that are not charities registered with the ACNC and meet the size criteria.

Portable long service leave update

Portable long service leave (PLSL) remains a topical area for NFPs with the introduction of PLSL across Australia in recent years, including in the community services sector. A key responsibility for organisations is to ensure they’re working with the relevant PLSL authorities, making the required leave payments to employees, and recognising long service leave provisions in financial statements as and when appropriate. In most cases, the PLSL schemes have not removed the employer’s primary responsibility to pay long services leave (LSL) to its employees. What has changed is that the employer may now be able to recover some of these costs from the relevant PLSL authority.

If you need assistance with Payday Super, have any questions about financial reporting, or portable long service leave, please contact our not-for-profit team.