How employers pay superannuation is changing.
What is changing?
As of 1 July 2026, all employers will be required to pay superannuation to their employees on the same day as they pay their wages. The Treasury Laws Amendment (Payday Superannuation) Act 2025 was recently signed into legislation which requires funds to be received in the employee’s superannuation account within seven days of payday. In the past, superannuation was only required to be paid into the employee’s accounts within 28 days of the end of the quarter.
This is a significant change for employers and their superannuation obligations. The overall amount of superannuation payable isn’t changing, but the reporting obligations and the timing for when superannuation is paid is drastically changing which could impact cashflow.
Why is it changing?
Payday Super is being introduced in an attempt to reduce the amount of unpaid super and to improve the transparency and visibility of payments. It is also aimed to help employees see the advantages of compound interest as their superannuation will be received and invested sooner, which should result in greater investment returns in the long run. This is the latest push from the Australian Government in increasing the average person’s superannuation balance in the long run after the increase from the super guarantee rate of 9.5% in 2021 to 12% from 1 July 2025.
How to make payments?
The Small Business Superannuation Clearing House (SBSCH) will close permanently on 1 July 2026 as part of the Payday Super reform. If you make your superannuation payments through the SBSCH you will need to switch to an alternative method to pay your employees’ super guarantee. Most payroll systems, including Xero, MYOB, Reckon and Employment Hero have built-in, super stream compliant clearing houses that allows for Payday Super compliance. There are also independent commercial clearing houses and some major super funds offer their own clearing house services for employers. Please note, that if you currently use the SBSCH, you will not have any access to the system after 30 June so all records that you require before the closure of this service will need to be downloaded.
What happens if I pay late?
Late payments of superannuation are liable for the Super Guarantee Charge (SGC). This is a penalty paid to the ATO when employers fail to meet the minimum superannuation contributions on time, which includes 10% nominal interest and a $20 per employee administration fee. SGC and the associated late payment of superannuation are not tax deductible. Please note, that when using a clearing house (including Xero and the payroll systems) it takes approximately five business days from the date of payment for the funds to reach the employee’s account. This will mean that in order to be compliant for the seven-day threshold, all funds should be paid into the super clearing house on payday.
ATO Approach & Advice
The ATO has advised all employers to update their system and process before 1 July to ensure compliance with Payday Super when the requirements are rolled out. This includes switching systems (if required) after the payment of the March 2026 quarter superannuation and trialling or creating the process that will ensure that superannuation will be paid on payday from 1 July.
The ATO recognises that there are often issues with the payment of super and they have stated that they will not be actively policing issues with late payments if employers do all that they can to ensure payments are made on time. For example, they have stated that if the funds are received into an employee’s superannuation account late because the contributions were rejected, if the employer quickly corrects the error and makes the rectification as soon as they are aware of the issue then there is a low risk of any repercussions or SGC being applied to the super payment. The longer that the payment is outstanding, the greater the risk of the ATO policing the non-payment and then SGC being applied (with interest, administration fee and non-tax deductibility of the payment).
Are there any exemptions?
There are some small exemptions that are geared towards making life slightly easier for employers. For new employees to the business, employers have up to 20 business days after the first payday to make the initial super contribution into their account. Irregular or out of cycle payments such as bonuses, commissions, back pay or advances that are not part of the regular pay cycle do not need to be paid within seven days. However, the superannuation guarantee on these amounts will need to be paid within seven days of the next payrun. Please note there is no exemption for small business, all employers must comply with this change in legislation.
Cashflow Impact
The change to Payday Super from quarterly superannuation payments will be a big change for a number of employers and could significantly impact their cashflow.
To illustrate this difference in cashflow, consider the following example for superannuation paid during the July – September quarter:
- Weekly staff wages = $100,000
- Quarterly staff wages = $1,300,000 (13 weeks x $100,000)
- Superannuation Rate = 12%
Under the current rules, superannuation would be payable as follows
- Quarterly wages = $1,300,000
- Superannuation @ 12% = $156,000
- Due Date for payment = 28 October
Under the new rules, superannuation would be payable as follows:
- Weekly wages = $100,000
- Superannuation @ 12% = $12,000
- Due Dates for payment
- 5 July 2026 (assumed first wage payment for the quarter), 12 July 2026, 19 July 2026………..27 September 2026
- 13 weekly payments in total
The change from 1x large super payment due by the 28th of October to 13x smaller payments throughout the quarter is significant. Employers will need to plan for this transition to ensure that they can meet their Payday Super obligations.
How can we help?
Hall Chadwick QLD can assist with reviewing your process for the Payday Super change and recommend any changes to make the transition period easier. We can also assist with budgeting and planning for this change and your business’ cashflow requirements.
We have previously written an article about Payday Super on 27 October 2025 that provides further information on this topic if you are interested.
If you have any questions or would like more information regarding Payday Super, please contact our business services team at Hall Chadwick QLD.
