Dec 8, 2025 Joel Hernandez
Payday Super legislation passed
The federal government’s Payday Super legislation will commence from 1st July 2026, requiring employers to pay superannuation contributions on the same day as wages. This reform is designed to reduce unpaid super and improve retirement outcomes for Australian workers.
Key Reforms:
- Super Guarantee (SG) payments must be made on payday, replacing the current quarterly payment cycle.
- Contributions must reach employees’ super funds within 7 business days of each payday.
- SG contributions are to be calculated on Qualifying Earnings (QE), including
- Ordinary Time Earnings
- Salary Sacrifice amounts
- Other wage components
- The ATO has released draft guidance (PCG 2025/D5) outlining its compliance approach from 1 July 2026 to 30 June 2027, including a risk-based compliance model.
- The ATO Clearing House will be closed, requiring employers to find alternative payment solutions.
- Superannuation funds must allocate or return unallocated contributions within 3 business days, down from 20 business days.
- Employers must report both qualifying earnings and super liability via Single Touch Payroll (STP) to support accurate super guarantee tracking.
- The updated Super Guarantee Charge (SGC) calculation includes:
- Final SG shortfall – Based on qualifying earnings. Late payments made before assessment may reduce this.
- Notional Earnings – Interest to compensate employees for lost fund earnings.
- Administrative uplift – A penalty to cover enforcement costs and encourage voluntary disclosure.
- Choice loading – Applies if an employer fails to comply with the fund choice rules.
- The super guarantee charges will generally be tax deductible, but additional penalties and interest applied after assessment will not be tax deductible.
Action to take:
To ensure a smooth transition and full compliance by 1 July 2026, employers should:
- Review payroll systems to confirm they can support payday super requirements.
- Engage with payroll software providers to ensure system readiness.
- Coordinate internally to align processes and timelines across Finance, HR, and Payroll.
Conclusion
Payday Super introduces significant changes to employer obligations. Proactive preparation will help minimise risk and ensure a smooth transition to the new regime.
