The Joint Bodies, which includes the SMSF Association, Australian Bookkeepers Association, Chartered Accountants Australia and New Zealand, CPA Australia, the Institute of Certified Bookkeepers, Institute of Public Accountants, SMSF Association and The Tax Institute made a submission to the regulator on draft versions of LCR 2026/D1, LCR 2026/D2, LCR 2026/D3 and LCR 2026/D4.
The submission contains 30 recommendations highlighting the strong concerns across the sector that the core message of Payday Super – that superannuation is required to be paid at the same time as earnings, but not necessarily by a different method – has not been communicated clearly or consistently across the draft LCRs.
Additionally, it stated that it is important to ensure that the closure of the small business super clearing house (SBSCH) is kept in perspective
The submission stated that it acknowledges the “significant effort” undertaken by the ATO to provide guidance ahead of the commencement of Payday Super.
“We support the policy objective of improving the timeliness of compulsory employer superannuation contributions and recognise the importance of clear administrative guidance in supporting employers and payroll providers through this transition,” it continued.
“Notwithstanding this, we have material concerns about the practical operability, consistency and clarity of the four draft LCRs when read together.”
The Joint Bodies said it had identified a number of areas of concern across the draft LCRs where key concepts are difficult to interpret, terminology is used inconsistently, or the guidance assumes levels of system capability or employer visibility that do not exist in practice.
“These issues are compounded by the interaction of the draft LCRs with existing ATO guidance, payroll processes, fund infrastructure constraints and the onerous penalty framework under Payday Super,” it stated.
Furthermore, it stated the combined effect of these issues creates a real risk that well‑intentioned employers may inadvertently fail to comply with their obligations, or take actions that worsen their compliance position, despite acting in good faith.
“This risk is most acute in relation to contribution timing, allocation mechanics, the operation of the maximum contributions base, exemption certificate, the treatment of fund‑level outages and the application of penalty uplift provisions,” it continued.
“Without further clarification, there is also a risk of inconsistent interpretation and implementation across payroll systems, advisers and employers.”
The Joint Bodies stated that to improve clarity and transparency, it recommends that the final LCRs include prominent, bolded text at the beginning of each ruling, clearly stating whether the ruling is administratively binding on the commissioner and that it does not have the same legal status as binding public rulings that determine the operation of the law;.
Additionally, it stated there needs to be clarity on how taxpayers and employers should understand and rely on the guidance in practice.
“Placing an explanation at the front of each ruling would materially reduce the risk of misunderstanding and ensure that users of the Payday Super LCRs engage with the guidance on an appropriately informed basis,” the submission stated.
Furthermore, to support effective implementation of Payday Super and reduce transitional risk, it recommends the ATO firstly prioritise the timely publication of the final LCRs, particularly draft LCR 2026/D4, well in advance of the end of the 2025–26 financial year.
It also urged the regulator to provide certainty to employers, payroll providers and superannuation funds by ensuring that final guidance on transitional arrangements is available while there is still sufficient time to act on it and consider clearly communicating expected publication timeframes so that affected stakeholders can plan accordingly.
“Early finalisation and publication of the LCRs will materially assist all parties in preparing for Payday Super and will support a smoother and more consistent transition into the new regime,” the submission stated.
