Attention all Employers! Are you Payday Super Ready?
Currently, many employers pay the required superannuation contributions for their employees on a quarterly basis. This is set to change under the Federal Government’s proposed Payday Super legislation.
What is Payday Super?
Payday Super is set to require employers to pay their employees’ super within a 7 business day period from when salary and wages are paid. This represents a major shift from the existing superannuation guarantee (SG) system, which currently functions on a quarterly schedule. Under the new Payday Super rules, SG contributions will be based on Qualifying Earnings (QE), a concept introduced with this reform that closely matches Ordinary Time Earnings (OTE).
The draft legislation was introduced into the House of Representatives in early October and the proposed start date for Payday Super is 1 July 2026.
Why it’s being introduced?
Payday Super is being introduced to improve retirement outcomes by having employers pay superannuation contributions at the same time as wages, instead of quarterly. The change also aims to reduce under-payment and non-payment of super, help employees track their contributions more easily, and ensure money is paid into retirement accounts faster which should hopefully lead to better compounding returns on investments.
What are some practical implications & challenges?
Instead of paying superannuation contributions every quarter, employers will now need to make payments in line with each payroll cycle (weekly/fortnightly/monthly).
Payroll systems and processes will need to be reviewed well ahead of 1 July 2026 to ensure super payments can be made on time, tracked appropriately, and remain compliant with any other updates. Employers should confirm their payroll software (e.g. Xero, MYOB, QuickBooks, etc.) supports Payday Super.
Cash flow management around Payday Super will be crucial for a lot of businesses that typically pay super contributions quarterly. Employers may find it beneficial to forecast how more frequent super payments will affect cash flow.
Employers and HR Departments may want to review their onboarding procedures to confirm all necessary information is collected, therefore reducing the likelihood of contribution rejections.
Businesses should also consider the onboarding and payment processes for contractors that will be classified as an ‘employee’ under SG regulations, keeping in mind that Payday Super rules can also apply to contractors.
What happens if I don’t comply?
Apart from some exceptions, SG contributions not received by the employee’s super fund within the required timeframe (7 business days from payday) may be liable for the Super Guarantee Charge (SGC). Late payments will also not be tax-deductible in full, including the SGC penalty and interest amounts.
ATO Practical Compliance Guideline
The ATO has released Practical Compliance Guideline 2025/D5 (PCG 2025/D5), outlining the compliance approach from 1 July 2026 to 30 June 2027. This guideline introduces three risk categories: low, medium, and high.
The PCG addresses situations may arise where an employer tries to make the correct superannuation contributions under Payday Super, but the payment is delayed in reaching the employee’s super fund. The risk level in such cases depends on whether the employer takes steps to fix the mistake and how promptly this is done. Employers who address errors as soon as reasonably possible will be considered lower risk than those who do not act quickly. Employers in the low-risk category are not expected to be subject to ATO compliance action.
The guideline notes that employers who continue to make superannuation contributions quarterly, rather than in line with Payday Super, may fall into the medium-risk group. The ATO will be more likely to review the compliance of employers in the medium-risk category.
The ATO’s main focus will be investigating high-risk employers, specifically where insufficient contributions are made after the deadline.
What to do now as an employer?
Whilst the Payday Super reforms are not yet law, it is expected that the legislation will be passed, and they will come into effect from 1 July 2026. This represents a significant change to how super contributions are currently administered and employers may want to seek advice or start preparing early so they are ahead of the transition and remain compliant.
Hall Chadwick QLD can assist with reviewing your current payroll process and system and recommend any changes that will make the move easier to Payday Super. We can help with budgeting and cash flow management and discuss strategies to help businesses avoid the medium to high-risk categories outlined in the PCG.
If you have any questions regarding this article or would like more information, please contact our business services team at Hall Chadwick QLD.
