Key policy changes affecting entity structuring
- Payday Super: From 1 July 2026, employers will be required to pay their employees’ superannuation guarantee contributions at the same time as each salary or wage payment. (ato.gov.au)
- Reduction of super concession for high balances: From 1 July 2025, individuals with total super balances over $3 million will face reduced tax concessions on the earnings portion that exceeds that threshold. The effective tax rate increase will apply to those earnings. (ato.gov.au)
How this impacts entity setups and trusts
- Start-ups and small businesses must ensure payroll systems can handle simultaneous wage + SG payments, especially if using payroll software or engaging external providers.
- Trust structures: beneficiaries who accumulate super balances over $3 million need to consider after-tax investment strategies vs retaining all assets in super to avoid reduced concession.
- Entities acting as employers must ensure compliance with the increased frequency and timing of super guarantee payments to avoid SG charge risks.
Practical structuring examples
- Small business employer: Lisa operates a small tourism business. With Payday Super coming into effect mid-2026, she updates her payroll provider so each time she pays wages, super is remitted on the same date. This avoids future penalties and cash flow misalignments.
- High net worth individual: Brad has multiple super accounts and investments; his combined super is expected to exceed $3 million. He reviews allocations, considers shifting some growth-asset investment to taxable investments outside super if earnings concession is progressively reduced.
Compliance tips & due diligence
- Review your payroll and accounting systems to ensure they can support more frequent super contributions and real-time payment tracking.
- For beneficiaries of trusts or corporate entities with high net worth, monitor total super balance — some reporting and tax obligations hinge on thresholds.
- Seek professional advice for cross-jurisdiction issues if any entities are foreign-owned or structured offshore.
Action steps for entity setup now
- When forming a new entity, incorporate in documentation the mechanisms for contemporaneous super payments — this could affect cash flow and contracts with employees.
- Use projections to estimate super balance growth and when you may cross the $3 million threshold. Strategize diversification where possible.
With these changes, entity structures need to anticipate timing, super obligations, and evolving tax concessions — setting up early with compliance in mind can mean savings and avoid costly corrections down the track.