This article was co-authored with Anna Ziegler and Sophia Dikolli.
What’s changing and how does it impact employers?
From 1 July 2026, the Payday Super reforms will take effect, requiring employers to pay superannuation guarantee (SG) contributions on every ‘payday’ – not at the end of each quarterly cycle.
For employers, this is a fundamental shift in how superannuation obligations are managed. The reforms demand tighter integration between payroll and superannuation processes, and the consequences of non-compliance may be considerably more severe than under the current regime.
What you need to know
A 7-day window replaces the quarterly cycle. Employers will have just 7 business days from each payday (i.e. the date of payment of “Qualifying Earnings”) to ensure contributions are received by the relevant superannuation fund, unless one of the limited exceptions applies such as the 20-day grace period for new employees. In practice, employers must pay super contributions to an eligible fund as soon as possible after payday to ensure that the fund receives the contribution by the compliance date. If that window is missed, a SG shortfall and potential charge arise for that pay event.
Every pay run is now a compliance event. Under the current framework, employers face at most four compliance deadlines per year per employee. However, the changes brought on by Payday Super mean that each pay cycle is a separate compliance event. Penalties for late compliance or non-compliance are likely to now apply more frequently for all employers as there is a greater potential for errors and late payments.
The compliance and penalty regime has teeth. The Australian Tax Office (ATO) will now assess the SG charge and issue notices to employers who fail to comply. The ATO will be able to data match information received from the Single Touch Payroll system and superannuation funds. A new administrative uplift of up to 60% applies to shortfalls. However, the actual amount of any uplift will now factor in the employer’s compliance history and whether a voluntary disclosure was made. Employers are still liable to pay interest (now calculated at the General Interest Charge rate) in lieu of notional earnings on any outstanding SG shortfall, and the choice loading (if applicable).
The earnings base is changing. Qualifying Eearnings replaces “Ordinary Time Earnings” as the basis for calculating SG amounts. For many employers, in practice this might just be a change in terminology. However, employees earning commissions, bonus payments, or those with salary sacrifice arrangements may have a broader base on which SG is calculated. Wage code analysis will be required to ensure that all appropriate payments are being considered. Employment contract terms may also need to be considered.
Cash flow will feel the squeeze. Employers who have historically relied on quarterly timing to manage working capital will need to rethink their cash flow strategies.
Tax deductibility. Under the previous framework, only on-time contributions were deductible. Under the new framework, both on-time and late eligible contributions are deductible, and the SG charge is also deductible.
Funds on notice – Fund allocation deadlines are tightening. It is not enough to simply remit on time – contributions must also be allocated to member accounts promptly. Under the new framework, regulated superannuation funds must allocate contributions within 3 business days of receipt, down from the current 20-day window. This means the entire end-to-end chain (from employer remittance to fund allocation) must operate within the 7-business-day window.
Employee verification requirements. The government-mandated SuperStream system is being enhanced as an attempt to reduce common errors in SG contributions. A key change is the introduction of member verification requests (MVRs), which allow employers (via their payroll solution) to confirm that employee fund details are correct and that the fund can accept contributions on the employee’s behalf. Employers will need to submit MVRs in circumstances including making a first contribution for an employee, where a nominated fund has changed, or where critical employee information has been updated.
Clearing houses are being retired. The ATO’s Small Business Superannuation Clearing House will no longer operate from 1 July 2026. Employers relying on this service will need to transition to alternative providers.
Why this matters now
The legislation has passed and the regulations have been released.
The ATO has outlined its compliance approach, including a risk-based enforcement framework for the first year of the reforms.
The ATO will prioritise allocation of compliance resources to areas of highest risk, being those employers who have not paid the minimum amount of SG contributions for their employees.
Employers who act now to audit their payroll systems, verify employee fund details, and test their processes will be in the strongest position come 1 July 2026.
Summary of changes
| Feature | Current position | New position (from 1 July 2026) |
| Payment frequency | Employers must pay SG contributions on a quarterly cycle. | Employers must pay SG contributions on every payday. |
| Payment deadline | SG contributions are due by the end of each quarterly cycle. | SG contributions are due within 7 business days from each payday, with a limited 20-day grace period for new employees. |
| Earnings base | SG is calculated on “Ordinary Time Earnings”. | SG is calculated on “Qualifying Earnings”. |
| Compliance events | Limited to four potential shortfall events per year. | Employers are exposed to shortfall events each pay cycle. |
| Penalty regime | SG charge comprises: – Shortfall calculation – salary and wages – Interest – 10% – Administration fee – $20 per quarter – Choice loading (if applicable) Further penalties could apply based on individual circumstances. | SG charge comprises: – Shortfall calculation – based on Qualifying Earnings – Interest – at the General Interest Charge rate – Administration fee – administrative uplift of up to 60% (can be reduced for voluntary disclosures) – Choice loading (if applicable) Further penalties could apply based on individual circumstances. |
| Tax deductibility of SG charge | Not tax deductible | Tax deductible |
| Fund allocation window | Funds have 20 days to allocate contributions to member accounts after receipt. | Funds have 3 business days to allocate contributions after receipt. |
How can we help
The Payday Super reforms raise complex questions across employment, superannuation, and corporate governance. The interaction with enterprise agreements, employment contracts, the treatment of irregular payments and allowances, and the transitional rules for the June 2026 quarter all warrant careful attention.
If you would like to discuss how these changes affect your business, or if you need assistance reviewing your payroll and superannuation compliance framework, please contact our Employment & Labour and Tax teams.