Super Alert – 7 August 2026: ATO law companion rulings on the Payday Super reforms, AFCA reported a record number of complaints in 2025-26
Welcome to the weekly KHQ Super Alert. This week, the ATO finalised three law companion rulings on the Payday Super reforms and released an interim decision impact statement following a relevant Federal Court decision. AFCA reported a record number of complaints in 2025-26 and published guidance for consumers affected by the Shield and First Guardian collapses. ASIC also commenced proceedings against auditors over alleged audit failures relating to the First Guardian Master Fund.
ATO – LCR 2026/1 – Payday Super: application and transitional provisions
On 5 August 2026, the ATO published LCR 2026/1 – Payday Super: application and transitional provisions (LCR 2026/1). LCR 2026/1 provides guidance on the application provisions of the Payday Super amendments and the savings provisions for the old Act. LCR 2026/1 also provides guidance on the provisions that support the transition from the quarterly superannuation guarantee system to Payday Super. These transitional rules are intended to address timing mismatches, legacy arrangements and overlapping actions or obligations that may arise during the transition period.
The transitional rules covered in LCR 2026/1 include:
- how excess contributions made before 1 July 2026 are applied under the new Act;
- cessation of the late payment offset;
- how contributions made between 1 July 2026 and 28 July 2026 will be applied;
- reversal on or after 1 July 2026 of pre-commencement sacrificed contributions;
- ending notice periods for the limit on shortfall increases for failing to comply with choice of fund requirements;
- repayments of overpayments relating to a shortfall component; and
- Norfolk Island salary or wages.
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ATO – LCR 2026/2 – Payday Super: eligible contributions
On 5 August 2026, the ATO published LCR 2026/2 – Payday Super: eligible contributions (LCR 2026/2). This Ruling is about eligible contributions, which are superannuation contributions an employer can make to reduce or avoid the SG charge. This Ruling explains the criteria the contributions must satisfy to be eligible contributions and the time periods within which the contributions must be received.
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ATO – LCR 2026/3 – Payday Super: calculation and assessment of the superannuation guarantee charge
On 5 August 2026, the ATO published LCR 2026/3 – Payday Super: calculation and assessment of the superannuation guarantee charge (LCR 2026/3). LCR 2026/3 provides guidance on how the SG charge is calculated and assessed as a result of the amendments made by the Payday Super reforms. LCR 2026/3 also provides an overview of the Payday Super reforms at paragraphs 8-12.
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ATO – Department of Education v Commissioner of Taxation [2026] FCA 898 interim decision impact statement
On 5 August 2026, the ATO released the Impact Statement in relation to the Federal Court’s decision in Department of Education v Commissioner of Taxation [2026] FCA 898. The decision considered whether the Victorian Department of Education (Department) was liable to superannuation guarantee charge under the Superannuation Guarantee (Administration) Act 1992 because the Department did not pay superannuation contributions in relation to a ‘salary loading allowance’ paid annually to teachers.
In the decision, the Court found that the Department was not liable to superannuation guarantee charge for failing to pay superannuation contributions in relation to the salary loading allowance, as the allowance did not fall within the relevant notional earnings base or within the relevant employees’ ordinary time earnings.
The Commissioner of Taxation has appealed the decision and maintains its views on the interpretation of ordinary time earnings as set out in the draft LCR 2026/D1. However, LCR 2026/D1 will not be finalised until the appeal process has concluded.
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AFCA – Record complaints recorded for 2025-26 period
On 4 August 2026, the Australian Financial Complaints Authority (AFCA) reported that Australians lodged a record 119,949 complaints with AFCA in the 2025–26 financial year. AFCA reports that this is the highest number on record and the third consecutive year complaints have exceeded 100,000.
Complaint volumes increased across all sectors during 2025-26, with the largest growth driven by major investment collapses and rising superannuation disputes. AFCA’s preliminary data as at 30 June 2026 shows it received 8,755 superannuation complaints, representing a 42 per cent increase on the previous financial year. Delays in claim handling, service issues and the rejection of superannuation insurance claims were the most common issues raised, with insurance claim complaints increasing by 82 per cent year-on-year.
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AFCA – FAQs for consumers affected by Shield and First Guardian collapses
On 31 July 2026, AFCA published an update which answers common questions AFCA has received from consumers impacted by the collapse of the Shield and First Guardian Master Funds. The update addresses a number of common questions from affected consumers, including complaint time limits, costs of lodging complaints, whether spouses should lodge joint or separate complaints, and the documents required to commence a complaint.
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ASIC – Proceedings commenced over alleged First Guardian audit failures
On 31 July 2026, ASIC announced that it has commenced Federal Court proceedings against Auditeo Australia Pty Ltd (Auditeo) and two others auditors in relation to alleged audit failures concerning the First Guardian Master Fund. ASIC stated that the proceeding forms part of its 2026 enforcement priority of seeking accountability for the collapse of First Guardian and related funds.
ASIC alleges that unqualified audit reports issued by Auditeo for the First Guardian Master Fund and its compliance plan for the 2020 to 2024 financial years were false or misleading, in contravention of s 1308(5) of the Corporations Act 2001 (Cth). ASIC is seeking declarations of contravention, pecuniary penalties, injunctions and other orders.
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