Have you planned for PayDay Super over the Christmas break?

Many small businesses will be closed for a couple of weeks over the Christmas-New Year period. In that time, you might have a few weeks of wages to pay. Last Christmas break, you might have processed your payroll a few weeks ahead, before you went on leave, and set up wages to be paid by direct debit on the payroll due date.

But what has changed now that PayDay Super has come into play?

PayDay Super requires you to approve superannuation for payment on or before the payroll payment date. When you’re paying wages regularly, either weekly, fortnightly or monthly, it’s easy to remember to pay superannuation as well and PayDay Super fits into your cashflow now that you’ve been paying it regularly for a couple of months. But  you will need to decide how you’re going to manage PayDay Super over the Christmas-New Year break, so that you stay compliant.

These are your options:

1. Process you payroll and PayDay Super on the same payment cycle as you do during the year. This could mean that you’re logging into your accounting software on Christmas Day to pay wages and superannuation on time – this is not ideal.
2. You will know ahead of time which employees are taking annual leave in December and January. You could process your Christmas-New Year pays in advance, set up payment of wages as a direct debit so that wages are still paid on their payment date. If any employees take sick leave during this time, you can process these adjustments when you return to the office.

The problem comes with PayDay Super. If you process wages ahead of time and approve superannuation ahead of time, the superannuation funds will be taken from your bank account on the same day as you approve super – not on the payment date of the payrun which could be a few weeks ahead. There is no reason you can’t do this if your cashflow can handle it. However many small businesses run tight on cash during December and January and this might not be an option for you.

Most accounting software now allows more than one authorised person to approve PayDay Super payments. You could nominate a second person, perhaps one of your admin staff, and have them approve super on the wages payment date.

If cashflow is tight over December-January and you can’t afford to pre-pay a few weeks of superannuation before you take a break, the only option is for you to approve superannation on the regular payroll payment date during this time.

If you’re unsure how to manage this, contact us to help you out.