Payday Super: What You Need to Know Before 1 July 2026

What is Payday Super?

Payday superannuation means employers must pay their employees’ super guarantee (SG) contributions at the same time as their wages.

In practical terms:

• Employers must ensure contributions for they pay to their employees’ super fund are received by the fund and allocatable within 7 business days after the payday (the “qualifying earnings” day). 

• A new earnings-base concept called Qualifying Earnings (QE) replaces or augments older bases such as ordinary time earnings (OTE). 

• The SG charge regime (the penalty regime when you miss or delay SG payments) is revised with higher liability than today’s SG Charge.  

When Does It Come Into Effect?

Payday Super comes into effect on 1 July 2026. From the first pay cycle on or after this date, all employers will be required to pay superannuation in line with the new timing rules.

Because the change applies immediately from that point, it’s important for businesses to begin preparing well in advance. Reviewing your payroll processes early will help you understand what updates are needed, identify any gaps, and ensure your systems are ready before the new requirements become mandatory.

What Are the Key Changes?

Here are the major reforms you’ll need to understand and act on:

Payment timing

• Under Payday Super, payment must be received and allocatable to the employee’s fund within 7 business days of the qualifying earnings (QE) day. 

• There is a transitional extended timeframe of up to 20 business days in certain circumstances  such as first SG payment for a new employee or first payment to a new fund. 

Definition of Qualifying Earnings (QE)

Qualifying Earnings will become the base for SG computation. It includes:

• Ordinary time earnings (i.e., ordinary hours, loading, commissions) 

• Salary-sacrificed super contributions 

• Excludes termination lump sums 

Reporting changes (STP)

Under the new framework, your payroll software will need to report QE and total super owed each pay run under the new version of Single Touch Payroll (STP) when updated.

Maximum Contribution Base (MCB) becomes annual

The MCB (which caps the employer’s SG obligation) changes from a quarterly cap to an annual cap per employer.

Tougher penalty / Super Guarantee Charge (SCG) regime

If SG contributions are late or short, the updated SCG rules apply:

• The “on-time” test is whether the fund receives and allocates the SG by the 7 business-day deadline (or the extended 20 business-day in allowed cases). Failure means SCG may apply. 

• The SCG components now include:

• Final SG shortfall (the amount required but not paid)

• Notional earnings (general interest charge (GIC) compounded daily on that shortfall)

• Administrative uplift: up to 60% of shortfall + notional earnings, if you qualify for voluntary disclosure and no recent ATO-initiated assessment. 

• Any choice loading (if an employee changes fund and the default employer fund was used.

• Late-payment penalty: If the SCG isn’t paid within 28 days of an Australian Taxation Office (ATO) notice, then an extra penalty applies: 25% of unpaid SCG for first time and 50% for repeat offenders. 

The on-time and late contributions and the SGC itself including final shortfalls,  notional earnings, administrative uplift and any choice loading are tax deductible. 

Additional GIC/interest and late payment penalties that accrue after the SGC assessment is not deductible. 

Why This Matters?

• For employees: Faster super contributions mean less time money sits idle outside the fund and more time it can work via compound growth. The government estimates significant benefits for younger workers.

• For employers: The shift creates major operational, cash-flow and systems impacts. Because you can no longer rely on large quarterly lump-sum payments, you must align payroll, funds details, clearing house / software, data accuracy and timing precisely. Many small businesses will need to model the impact. 

• Cash-flow risk: For small business owners, the timing demands may reduce the “float” formerly available by paying SG quarterly — you’ll need to budget for more frequent super outflows. 

• Compliance risk: Because the ATO will link payroll data (STP) with fund data (when the super payment lands) this creates a sharper compliance window and the potential for penalties will be higher. It’s not just “did you pay” but “did the fund allocate it in time”. 

What Employers Should Do Now? 

Here are practical steps your business should consider before 1 July 2026:

1. Audit your payroll systems & partner software

• Check whether your payroll provider supports the new requirement of paying super aligned with paydays and delivering payment to the fund within 7 business days.

• Confirm your clearing house / payment method (via SuperStream & New Payments Platform (NPP)) is ready for near-real-time payments.

• If you currently use the ATO Small Business Superannuation Clearing House (SBSCH), note that it will close to new users from 1 October 2025 and shut down by 1 July 2026.

2. Review your pay cycle & cash-flow modelling

   • Assess how paying super at every pay run will affect your weekly or fortnightly outgoings.

   • Consider adjusting budgets or working capital to manage the increased payment frequency.

3. Ensure fund and employee data is accurate upfront

• Collect and validate each employee’s super fund choice, USI, member number, TFN and verified fund details before the first pay run under the new regime. Errors lead to bounce-backs and missed deadlines. 

• Establish processes for new starters so their fund details are captured early.

4. Update internal payroll processes 

   • Implement internal checks to confirm contributions are sent and received on time.

   • Strengthen record-keeping procedures to support ATO compliance reviews.

5. Prepare for compliance risk

• Keep proof of payment and proof of timing (that the fund received the contribution within the 7 business day window).

• If you have historical shortfalls, consider remediation now — early action may reduce compliance risk.

• Review whether your payroll software supports reporting of Qualifying Earnings (QE) and aligns with updated STP requirements.

6. Engaging professional support

   • Speak with your accountant to review your overall payroll setup, cash-flow modelling, and compliance obligations under the new rules.

   • Consider ongoing bookkeeping or payroll processing services to ensure your super payments, reporting and reconciliations are accurate and compliant every pay cycle.

   • Professional guidance can help streamline your transition, reduce compliance risk, and ensure your business remains fully aligned with the updated legislation.