BDO submission – PCG 2025/D5: Payday Super: First year ATO compliance approach

BDO welcomes the opportunity to provide feedback on the Australian Taxation Office’s (ATO) Draft Practical Compliance Guideline (PCG) for Payday Super’s first year compliance approach.

Our submission strongly supports the principle that employees should receive their full superannuation entitlements promptly, and that employers should be supported in their efforts to comply with the new requirements. We recommend that the ATO’s compliance focus in the first year should be on consultation and education, rather than penalties, to allow employers sufficient time to adapt their payroll systems and processes.

Key recommendations in our submission include: 

• Consultation and education: The ATO should prioritise supporting employers through consultation and education in the first year, recognising the challenges of implementing new payroll processes 
• Practical relief for employers: Employers should not be penalised for late contributions arising from circumstances outside their control, such as delays by clearing houses, payroll system outages, or errors by super funds or employees 
• Clear guidance on risk: The ATO should provide more comprehensive examples of low-risk scenarios and clarify the application of compliance resources, especially for small businesses and cases involving rejected contributions 
• Updates to guidance materials: Existing ATO guidance should be updated to reflect the new Payday Super regime, ensuring employers have clear, relevant information 
• Extended transition period: Consideration should be given to extending the compliance approach for up to 24 months, acknowledging the significant effort required by employers to implement these changes. 

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Contact your local BDO adviser from our tax services team if you would like further information on our submission.