[et_pb_section fb_built=”1″ _builder_version=”4.16″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” locked=”off” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Intro” _builder_version=”4.27.7″ header_2_font_size=”32px” custom_margin=”||0px|||” custom_padding=”||28px|||” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n
We are a month into Payday Super, and the transition from the old system to the new still has a few wrinkles. Some issues are new; some are long-standing misconceptions. So we sat down and spoke with Michael Fox, an accountant, tax expert, and Reckon Partner who owns and operates his own accounting firm and Melbourne gallery that specialises in the arts industry.<\/p>\n
In his experience, the arts industry highlights the biggest challenges of paying super when pay schedules are irregular, relationships between contractors and employees are blurred, and interpreting the ATO\u2019s guidance is buried in jargon. However, Fox\u2019s guidance on Payday Super rings true across industries.<\/p>\n
Interview has been edited for length and clarity.<\/em><\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2026\/08\/Michael-Fox-Photo.png” alt=”Michael Fox, Arts Accountant” title_text=”Michael Fox, Arts Accountant” _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Michael Fox, Principal of Michael Fox Arts Accountant and Valuer, at his Collingwood practice and art gallery.<\/em><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Super contributions are part of your obligations as an employer. But when it comes to contractors and sole traders, not every business has a clear understanding of who is entitled to super.<\/p>\n The guidance from the ATO changed in 2025 regarding who is entitled to super for sole traders, freelancers, and contractors. While this is established, awareness has yet to catch up. Fox explains that you need to distinguish between employees and contractors.<\/p>\n \u201cMake sure you properly classify everyone you engage with,\u201d<\/em> he says. \u201cUnderstand whether they’re an employee \u2014 that should be pretty clear \u2014 or a contractor with an ongoing, effectively labour-hire, arrangement.\u201d<\/em><\/p>\n Given how often super needs to be paid now, the issue of who is owed super becomes more pressing. Make sure you understand who is entitled<\/a> to super before work starts.<\/p>\n Payday Super expedites the timeframe for paying contributions: SGs must land in their super funds within 7 business days of paying qualifying earnings (unless an exception applies). This new method can expose businesses with more informal approaches to paying employees \u2014 a problem more about process than compliance.<\/p>\n \u201cYou pay someone promptly because you want to, but they haven’t filled out their paperwork,\u201d<\/em> explains Fox. \u201cFor example, they haven’t completed a TFN declaration or a Super Choice form. That means the super can’t be paid, because you can’t even put them onto your payroll system \u2014 and then all of a sudden, seven days go by, and you’re up for at least a $20 shortfall penalty with the ATO.\u201d<\/em><\/p>\n To make sure you’re above board with super, you need an employee onboarding protocol that keeps you compliant and ensures staff do their<\/em><\/strong> due diligence as well. It\u2019s essential for new hires to provide relevant information; not all the burden is on the employer here. Employee management software, like Reckon Mate<\/a>, can help get this information organised, like contact details, TFN, super funds, and employment type, before the first paycheck.<\/p>\n The biggest catch-out for Payday Super is the requirement to make super contributions every pay cycle. The short compliance window, combined with increased pay frequency, significantly increases your chances of copping a penalty if you\u2019re not careful, warns Fox.<\/p>\n \u201cIf you’re paying everyone every week, that’s probably not a great idea going forward,\u201d<\/em> he explains, \u201cbecause if you miss a super deadline, you might get penalised 52 times. If it’s every fortnight, it’s 26. Still a lot. So maybe look at doing it 12 times a year, not 52.\u201d<\/em><\/p>\n In addition to automating the payroll process with your payroll software, increasing the time between pay periods can serve as a safeguard against admin errors that could incur penalties from the ATO, like the superannuation guarantee charge (SGC).<\/p>\n Another sticking point for Payday Super is how you fund your new obligations. Under the old convention, businesses had three months to come up with the funds to pay super contributions. Now? Payday Super makes SG payments in line with salary and wages, meaning you need the working capital to pay the same super in more frequent, smaller instalments.<\/p>\n \u201cOne of the big issues with Payday Super is just the cash flow,\u201d<\/em> Fox explains, \u201cbecause previously you had three months before you had to pay your super guarantee, and now it’s every seven days. That’s a big deal.\u201d<\/em><\/p>\n This is where cash flow forecasting<\/a> is essential. Calculate what cash you\u2019ll need in advance so that you aren\u2019t caught out with insufficient funds at payday.<\/p>\n The right advice goes a long way when navigating the ATO’s guidance and government legislation. “There are a lot of very particular rules when it comes to the taxation of the arts,\u201d<\/em> Fox says. \u201cAnd the Tax Office isn’t letting anyone know about them \u2014 it’s so buried in their websites.”<\/em><\/p>\n On top of that, Payday Super adds another layer to the process of running a business \u2014 one that adds a timer to your obligations. Under Payday Super, Fox sees echoes of how GST was introduced back in the day.<\/p>\n “In the first year of GST, the government received so much money because everyone just wanted to comply,\u201d<\/em> he remembers, \u201cand then people figured it out, and the GST revenue went down.”<\/em><\/p>\n \u201cThe introduction of Payday Super is a little like that. People are trying to pay all the super, but they might be paying more than they need to.”<\/em><\/p>\n With the new rules in force, the ATO has mentioned leniency in the first year of the rollout, but businesses shouldn\u2019t treat that as a guarantee. This is where having an accountant, like Fox, can protect businesses from making mistakes and copping penalties from the ATO.<\/p>\n “It’s like everything in life \u2014 it’s cost-benefit, isn’t it? What an accountant would cost you per year, compared to potential penalties with the ATO,\u201d<\/em> he debates. \u201cThe penalties can be really steep \u2014 and also, most likely, you’re paying more tax than you need to.”<\/em><\/p>\n So don\u2019t go it alone with Payday Super: speak with your accountant or bookkeeper <\/a>to get the right advice for your business.<\/p>\n Michael Fox is the principal of Michael Fox Arts Accounts and Valuer<\/a>, where he assists artists and their businesses with their accounting needs. Fox is also a tax specialist with a master’s in tax from Melbourne Law School and has experience consulting on tax policy for nonprofit organisations and state and federal governments.<\/p>\n Outside his accounting firm, Fox is an avid art enthusiast and always looks to promote and champion Australian art at his own gallery, Fox Galleries<\/a>. On August 22, Fox Galleries will host well-known Australian artist Victor Rubin<\/a>\u2019s collective works in the exhibition Archive. For more information and contact details, head to his website.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2024\/10\/Case-Study-Circle-Portrait-1.png” alt=”Michael Fox Arts Accountant and Valuer” title_text=”Michael Fox Arts Accountant and Valuer” align=”center” _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Michael Fox, Principal of Michael Fox Arts Accountant and Valuer, and Director of Fox Galleries<\/em><\/p>\n [\/et_pb_text][ba_social_share icon_bg=”#03002e” icon_padding=”10px|12px|10px|12px|true|true” layout=”classic” show_text=”off” btn_padding=”0px|0px|0px|0px|false|false” btn_bg_color=”RGBA(255,255,255,0)” _builder_version=”4.23″ _module_preset=”default” custom_margin=”50px||||false|false” custom_padding=”25px||||false|false” custom_css_before=” content: %22SHARE THIS%22;|| font-size: 16px;|| font-weight: 700;|| line-height: 22px;|| letter-spacing: 0em;|| text-align: center;|| color: #ff5447;|| margin-bottom: 10px;|| display: inline-flex;|| position: absolute;|| margin-top: 10px;” border_width_top_main=”1px” border_color_top_main=”#e4e4e4″ border_radii_icon=”on|5px|5px|5px|5px” global_colors_info=”{}” custom_css_before_last_edited=”off|desktop”][ba_social_share_child _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”facebook” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”linkedin” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”email” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][\/ba_social_share][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Payday Super insights from accountant Michael Fox. Learn how to avoid penalties, manage cash flow and stay compliant.<\/p>\n","protected":false},"author":36,"featured_media":307704,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":" Changes to how casual employees can transition to permanent employment are coming this year. The new process adds an employee-driven element, where, depending on certain circumstances, a casual employee can notify their employer of their intention to move from casual to permanent employment.<\/p> This is a marked departure from the previous rules, which were entirely up to the employers. So, what does this new process look like, and what does it mean for small businesses?<\/p> Let\u2019s go through it.<\/p> The \u201cClosing Loopholes\u201d amendment has directly changed how casual employees remain casual or transition to permanent employment.<\/p> Under the old rules in the National Employment Standard, a casual employee\u2019s employment status was entirely employer-driven. This meant that any conversation or initiation of a casual employee was through the employer's agreement or arrangement.<\/p> Now, employees can let their employer know their desire to change their working status, called the employee choice pathway.<\/p> Under the employee choice pathway, casual employees can pursue permanent employment by notifying their employers of their intent to change from casual to permanent. The following criteria have to be met before notice can be given:<\/p> The changes have been in effect for medium-large businesses since 26 February 2025. Under the legislation, businesses with 15 or more employees must follow the employee choice pathway procedure.<\/p> The changes will come into effect on 26 August 2025 for small businesses (15 employees or fewer). Under the rules of casual employment, an employee may only notify their intent for permanent employment if they have been employed for more than 12 months.<\/p> The employee choice pathway is twofold: a notice of intent to transition from casual to permanent, and the response to that notice. While this may seem simple, a number of factors determine the outcome. First, before a notice can be made to move from casual to permanent, we must look at what defines casual employment status.<\/p> The legal definition of what constitutes casual employment can be found in the Fairwork Act 2009 (15A). This is a rather large document, so for all intents and purposes, casual employment can be simply defined like this:<\/p> If you are unsure about the definition of casual employment<\/a>, the Fairwork Ombudsman has materials and resources.<\/p> The notice a casual employee gives to their employer about moving to permanent employment requires two factors to be satisfied:<\/p> Here is an example of a notice to demonstrate what this would look like in the workplace.<\/p> Imagine a bartender working casually for over 10 months at a large pub with more than 15 workers. This casual employee has been given more responsibilities in the last few months, including rostering other casuals. The employee has also noticed they work fixed, regular, rostered shifts. With this information and a desire for more security in their employment, they approach their employer with notice to transition from casual to permanent employment.<\/em><\/p><\/blockquote> In this example, the employee meets the requirements to give notice and pursue the casual choice pathway. After notice occurs, the employer is required to respond. Let\u2019s take a look.<\/p> Once an employer receives a notice from their employee, they have 21 days to respond. Before a response is made, the employer should consult with the employee about what changes the transition would make to their employment. This discussion should include:<\/p> After a consultation, the employer can accept or reject the notice of employment change.<\/p> When accepting a change, the employer needs to include what has been consulted previously and provide a new written employment agreement with their employee. The changes must immediately be implemented after the acceptance of employment status unless the employer and employee have agreed on a different commencement date.<\/p> When it comes to rejecting a notice, employers need a good reason. An employer can justify a rejection of the notice when either of the following circumstances apply:<\/p> Accepting or rejecting an employee's notice must be thoughtfully considered, whatever the circumstances, and communication should be clear and concise. If there is a disagreement, it may come down to both sides not effectively communicating. However, dispute resolution procedures are in place if the relationship is beyond solving in the workplace. It also should be noted that protections are in place<\/a> against any adverse actions taken in reaction to an employee submitting a notice.<\/p> Any dispute must be resolved first in the workplace. However, if a dispute occurs due to a disagreement about an employee\u2019s employment status, there are a number of avenues that can be explored:<\/p> Unfortunately, if either of these doesn\u2019t remedy the situation, the matter may have to be resolved in court, arbitrated by the Federal Circuit Court.<\/p> As the changes on the pathway from casual to permanent employment are new, there will be a degree of awkwardness in implementation. What is essential is good communication and honesty when discussing an employee's future in your business. As the date for small businesses to follow the new rules is set for 26 August 2025, there is plenty of time to review your procedures for managing your staff<\/a>.<\/p> You may find that the new process has new opportunities for dedicated employees<\/a> to commit fully to your business. Whatever the employee choice pathway brings, ensure you are prepared with proper payroll systems<\/a> to navigate the changing landscape.<\/p>","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[343],"tags":[],"class_list":["post-307687","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"yoast_head":"\nContractor or employee: Knowing who gets paid super<\/h2>\n
Payday Super best practice: Onboarding new employees<\/h2>\n
Pay frequency: 52 chances to cop a penalty<\/h2>\n
Cash flow problems: Running out of cash on payday<\/h2>\n
Going it on your own: Operating without advice<\/h2>\n
About Michael Fox, Arts Accountant<\/h2>\n
Key changes to casual employment rights<\/h2>
Who is affected by the employee choice pathway?<\/h2>
The process involved<\/h2>
Defining casual employment<\/h3>
Giving notice of employment change<\/h3>
Responding to a notice<\/h3>
Accepting or rejecting an employment change notice from an employee<\/h3>
What happens if there is an employment dispute?<\/h2>
The bottom line<\/h2>