Payday Super Reforms: What Employers Need to Know
The Australian Treasury has released details of the Payday Super measure, first announced in the 2023-24 Federal Budget. These reforms aim to address the problem of unpaid or underpaid superannuation by requiring employers to make Superannuation Guarantee (SG) contributions more frequently. Starting from 1 July 2026, employers will be required to make these payments on payday, aligning superannuation contributions with wage payments.
Key Changes from 2026
Under the new system, whenever an employee is paid their Ordinary Time Earnings (OTE), the employer will need to ensure SG contributions are made within seven days. This replaces the current practice of quarterly payments. If contributions are late, employers will face a new SG charge and penalties.
Here are the main changes in the updated SG charge framework:
- Outstanding SG Shortfall
The SG shortfall will now be calculated based on OTE instead of total salaries and wages. - Notional Earnings
Unpaid SG amounts will accumulate daily interest from the due date, at the General Interest Charge (GIC) rate on a compounding basis. - Administrative Uplift
A penalty will be applied to reflect enforcement costs. This can increase the SG shortfall by up to 60%, although reductions may apply for voluntary disclosures. - SG Charge Penalty
Additional penalties of up to 50% will apply if the outstanding SG charge is not paid within 28 days of the assessment notice.
Unlike the current SG charge, the new charge will be tax-deductible. However, penalties and interest incurred for unpaid amounts within the 28-day period will not be deductible.
Compliance and Support
To support this shift, several additional measures will be introduced:
- Faster Allocation by Super Funds
Superannuation funds will be required to allocate contributions within three business days, compared to the current 20-day timeframe. - Revised SuperStream Standards
The standards for data and payments will be updated to handle the more frequent transactions. - Closure of the Small Business Superannuation Clearing House
The Clearing House will be retired on 1 July 2026, prompting small businesses to adjust how they manage superannuation payments.
The Australian Taxation Office (ATO) will also strengthen its enforcement efforts by matching employer Single Touch Payroll data with superannuation fund reports. This will enable the ATO to detect late or missing payments more efficiently.
Preparing for Change
The Government plans to release draft legislation later this year for consultation, offering an opportunity for employers and stakeholders to provide feedback on the proposed changes. Employers should start preparing now to ensure their payroll systems are capable of meeting the new requirements.
This transition to Payday Super marks a significant change, ensuring that employees receive their superannuation entitlements more promptly. It will also help close the gap on unpaid super, enhancing worker protection and financial security. For employers, the new rules mean more frequent payments and a need for timely, accurate payroll processing.
Next Steps for Employers
Employers should start reviewing their payroll systems and practices to ensure compliance with the new payday-based SG contribution requirements. Staying ahead of these changes can help avoid costly penalties and strengthen trust with employees by ensuring their entitlements are paid on time. Keep an eye out for updates as the draft legislation is released for consultation.
The Payday Super reforms represent a major shift in how superannuation payments are managed in Australia. By moving to payday-based contributions, the government aims to improve the reliability and timeliness of super payments, safeguarding the financial future of employees across the country.
