While Payday Super aims to improve super payment frequency, some higher-income earners may face an unexpected issue. More frequent SG payments could affect concessional contribution strategies.
Key Issue
Under the new rules, employers may pay SG more frequently and, in some cases, at higher levels due to changes to the Maximum Contributions Base (MCB).
As a result, some employees may:
- Use concessional caps sooner
- Lose salary sacrifice flexibility
- Need to adjust personal deductible contribution plans
- Risk excess concessional contributions
Real Example
The case study on pages 3–4 shows how this may occur. An employee who receives a large performance bonus may receive more SG under the annual MCB model than under quarterly calculations.
In one example, SG increased by $4,500 and fully used the employee’s concessional cap.
Why This Matters
If you already salary sacrifice or plan personal deductible super contributions, you may need to recalculate your strategy under the new framework.
Speak With Our Team
Payday Super may significantly affect concessional contribution strategies for higher-income earners, especially where salary sacrifice arrangements or personal deductible contributions already exist.
If you are concerned about how the new rules may affect your super contribution caps or tax planning opportunities, contact our team to review your strategy before the changes take effect.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.