Payday Super is about to send you more clients with ATO debt than you’ve had all year

Here’s a prediction I’m confident in: over the next two quarters, more of your clients are going to show up with ATO debt attached to their deal than at any point since Covid.

Payday Super went live on 1 July. Super now has to land in the employee’s account within seven business days of every pay run. Not quarterly. Every cycle, no transition period.

That sounds like a compliance story. It’s actually a deal-flow story, and here’s why.

Where the float used to come from

A huge number of the SME clients you fund were using the quarterly super cycle as an informal cash flow buffer. Weekly wages, quarterly super, up to three months of float sitting in the business at any given time. That float wasn’t documented anywhere. It wasn’t in the numbers you were shown. It was just how the business breathed.

That float is gone. Not shrinking, gone, starting from the first pay run in July.

Why this becomes your problem, not just theirs

When that float disappears, something else has to give. In a lot of businesses, what gives first is the BAS. Super has to be paid, it’s now visible to the ATO in near real time, and unpaid super is Director Penalty Notice territory for the director personally. The BAS feels like the softer option to let slide.

That’s the moment a client who looked clean six months ago walks into your office with ATO debt on the books, and it wasn’t there when you first assessed the deal.

The number underneath all of this

More than $54 billion in collectable tax debt sits in the system right now. Two-thirds of that sits with SMEs, which is to say, your clients. That number was already large before Payday Super started squeezing the exact businesses most likely to carry it. It’s not going to get smaller from here.

It’s not the only trigger, just the newest one

Payday Super isn’t the only thing that pushes a client into tax debt. It’s just the newest one to watch for. But the underlying risk hasn’t changed: if your client has outstanding tax debt and isn’t in an ATO-approved payment plan, it can blow up your deal regardless of how they got there.

What to actually do about it

This doesn’t need to be complicated, but it does need to become routine. A few practical moves:

• Ask the question directly, every time. Is there any outstanding tax debt? Make it a standard part of assessment for every deal, not just ones that already look shaky. The businesses that surprise you are the ones you didn’t think to ask.
• Flag the profile that’s most exposed right now. Weekly or fortnightly wages combined with a history of quarterly super payments is the specific combination that just lost its float. If you see that pattern, dig one level deeper before you proceed.
• Date-check any existing payment plan. If it was set up before 1 July, treat it as potentially out of date rather than assuming it still holds. Ask when it was last reviewed against current cash flow, not just when it was signed.
• Don’t wait for a credit check to tell you. By the time ATO debt shows up on a credit report, the deal is already at risk. Surfacing it at assessment, through a direct conversation, gives everyone, you, the client, and the funder, time to fix it instead of reacting to it.
• Loop us in early if something surfaces. A payment plan that’s drifted out of sync with the business, or debt that’s just come to light, is far easier to sort at assessment than at settlement. Send us the rough numbers and the timeline and we’ll come back the same day with a clear read.

Why it’s worth the extra step

The deals that hold together are the ones where ATO debt gets surfaced early, when someone actually asks the question, rather than found later through a credit check or a DPN. The deals that fall over are the ones where it surfaces at the last minute, after the float’s already gone and nobody’s checked.

If you’ve got a client where Payday Super has plausibly changed the picture since their last review, that’s worth a conversation now, while there’s still time to fix it.

Michael Moon is Director at Tax Assure, an ATO debt management firm. Tax Assure works with brokers, accountants, and advisors to negotiate, reduce, and manage tax debt across the recovery lifecycle. For questions about your clients’ ATO debt or to discuss a referral, reach out directly.