For many employers, Payday Super is no longer news, it’s an upcoming major shift to the Australian superannuation landscape.
As part of a government initiative to boost compliance and improve retirement outcomes, Payday Super will be introduced on 1 July 2026.
Here is a comprehensive guide to understanding Payday Super and how you can best prepare for the change.
Feature | Existing Law (Before 1stJuly 2026) | Payday Super (From 1stJuly 2026) |
Payment Frequency | Quarterly (minimum) | On payday (matching pay cycle) |
Employer Payment Deadline | 28 days after the end of the quarter. | Must be received by the superannuation fund within 7 business days of payday. |
Fund Allocation Deadline | Superannuation funds have a 20-day timeframe to allocate or return contributions. | Superannuation funds have a 3-business day timeframe to allocate or return contributions |
Calculation Base | Ordinary Time Earnings (OTE). | 12% of their Qualifying Earnings (QE) - including OTE, commission, and salary sacrifice amounts, amounts which would qualify as qualifying earnings had they not been sacrificed for superannuation. Also includes earnings to workers that are under the expanded definition of employees such as independent contractors paid mainly for labour. These payments are covered only once if falling in multiple categories. |
Late Payments | Subject to Superannuation Guarantee Charge (SGC) quarterly, penalties up to 200%. | SGC assessed automatically per pay period; penalties up to 50%. |
Reporting | Quarterly, or when payment is made. | Real-time reporting of QE and SG liability with each payday (via STP). |
The ATO has finalised its compliance approach, with employers being assessed by the ATO and put into categories based off how promptly and accurately Payday Super payments are made. These categories are:
- Low risk: correcting errors as soon as possible, making genuine efforts to complete all payments on time
- Medium risk: delays in payment but make sufficient super contributions
- High risk: insufficient contributions, calculating earnings incorrectly and not paying the SGC
This will allow ATO to prioritize governing higher risk areas and encourage you to follow the legislation and minimize penalties. The penalty is the Superannuation Guarantee Charge (SGC), a payment when payments aren’t received by the superfund within 7 business days of payday or paid to the incorrect fund. The SGC includes the unpaid superannuation shortfall, notional interest, and an administrative uplift. The SGC is changing to be tax deductible from 1 July, however you cannot claim tax deductions on interest or late payment penalties for the SGC.
Although payday super promises benefits for employees, the shift to payday super creates complex challenges across the ecosystem—from employers to superfunds and the software providers that support them.
For Employers:
- An immediate payment removes the employer’s ability to hold funds which changes their cash flow management
- Only seven days are granted for the superannuation to the received, leaving tight deadlines and no room for errors or bank delays
For Superannuation Funds:
- Increased number of files and payments means more volume needs to be processed in a shorter amount of time
For Software Providers:
- Managing software updates to handle compliances with the updated Single Touch Payroll
- Redesigning the software system for instantaneous calculations and instant reporting
With the transition to payday super underway, preparation should be quickly becoming a priority for employers.
1. Review Payroll Governance and Business Processes
Ensure you have up to date superannuation fund details of all employees, correcting all error/warning messages from superfunds, as they could be rejected after 1 July. Make sure a process is created to quickly correct any errors, so your superannuation fund receives the contribution within 7 business days after payday.
2. Review Cash Flow
Because superannuation is paid more often, you will need to reforecast your cash flow to accommodate more frequent outflows rather than one large quarterly payment.
3. Confirm When Your Software Will Be Ready
Contact your digital service or payroll provider to find out. If you use a clearing house or superfund portal, check if they are ready and if you need to make any updates. If you're still using the Small Business Superannuation Clearing House (SBSCH), transition now to an alternative provider.
If you would like to understand how these developments may impact you, contact the Hall Chadwick team for tailored advice.
