The Australian Government is making a major change to how superannuation contributions are paid. From 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) contributions on payday, rather than the current quarterly or monthly payment cycle. This shift aims to strengthen Australia’s superannuation system, reduce unpaid super, and improve retirement outcomes for millions of workers.

For small and medium businesses, this change means adjusting payroll systems, cash flow management, and compliance processes to ensure super is paid in line with salary and wages. Here’s what you need to know about the upcoming reforms and how they will impact both employers and employees.

Why is super moving to a payday model?

Currently, employers only need to pay SG contributions quarterly, meaning employees may not see their super until months after earning it. The Government’s reform aims to:

• Reduce unpaid and underpaid super, ensuring employees receive what they’re owed on time.
• Improve retirement savings, with more frequent super contributions benefiting from compound interest.
• Increase accountability, making it easier for employees to track their super payments and for regulators to detect non-compliance.
• Enhance payroll efficiency, reducing large super liabilities that build up over time.

How will this affect employers?

Super must be paid within 7 days of payday

From 1 July 2026, every time an employer pays Ordinary Time Earnings (OTE) to an employee, they will have 7 calendar days to ensure the super contribution reaches the employee’s nominated super fund.

• Failure to meet this deadline will result in an SG charge, which includes penalties and interest.
• Employers must review their payroll systems and ensure they can handle real-time super payments.

Exceptions for some payments

There will be a few exceptions, such as new employees, where contributions for OTE paid in the first two weeks of employment will have a deferred due date and small or irregular payments: which will not be considered a payday until the next regular OTE payment occurs.

What happens if employers don’t pay on time?

Employers who fail to meet the new payday super requirements will face an updated SG charge, which aims to fully compensate employees for unpaid or late super.

The updated SG charge will include:

• Outstanding SG shortfall based on OTE.
• Notional earnings interest (currently 11.36% per year, compounding daily).
• Administrative uplift penalties (up to 60% of the SG shortfall, reduced for voluntary disclosures).
• General interest charge on outstanding amounts.
• Additional penalties of up to 50% of the unpaid SG charge if payment is not made within 28 days of an ATO notice.

Late payments will not be tax-deductible, increasing the financial burden for non-compliance.

How can businesses prepare?

While the reforms won’t take effect until 1 July 2026, businesses should start planning now. Here are key steps to prepare:

• Review payroll processes to ensure super payments can be processed with every pay cycle.
• Engage with payroll providers to update systems for automated super contributions.
• Assess cash flow impacts and adjust financial planning to accommodate more frequent super payments.
• Educate employees about the changes and ensure they understand how to track their super payments.
• Stay informed on legislative updates as the ATO continues consultations with businesses on implementation details.

ATO compliance and enforcement

With increased visibility from Single Touch Payroll (STP) data, the ATO will be able to quickly detect missing or late super payments.

Employers will be required to report OTE and total SG liabilities via STP, allowing the ATO to track compliance in near real-time. Businesses that repeatedly fail to meet their obligations may face higher penalties and enforcement actions.

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Payday Super is a significant change to Australia’s superannuation system, introducing new compliance requirements for employers while also altering payroll processes. To adapt effectively, businesses should review their payroll systems, plan ahead, and ensure they are prepared for the transition before the July 2026 deadline. If you need guidance, our team is here to help.