Australian employers face one of the most significant changes to compulsory superannuation in decades as the Payday Super reforms come into effect from 1 July 2026. The Australian Taxation Office (ATO) has outlined a series of sweeping reforms that will overhaul when, how, and how often employers pay superannuation guarantee (SG) contributions for their employees — with implications for payroll systems, cashflow, compliance and retirement outcomes for workers.

Under the current system, employers generally pay super quarterly, with contributions reaching employees’ funds up to 28 days after each quarter ends. From 1 July 2026, this system will be replaced by Payday Super, requiring employers to pay SG contributions in line with their pay cycles and ensure they are received by super funds within 7 business days of each payday. This new payment requirement aims to tighten compliance, improve visibility of contributions, and reduce the billions of dollars lost in unpaid super each year.

Key Changes Employers Must Prepare For

1. Super Paid on Payday, No More Quarterly Lag The most fundamental change is timing: employers must now align superannuation payments with each payday, instead of retaining cash until end-of-quarter deadlines. Contributions must be received by the employee’s super fund within 7 business days of the payday, or in limited cases, such as onboarding a new employee or switching to a new fund extended up to 20 business days.

2. New Concept: Qualifying Earnings (QE) The basis for calculating SG changes from Ordinary Time Earnings (OTE) to a new definition called Qualifying Earnings (QE). While QE covers similar amounts to OTE, it formally brings together ordinary time payments and certain additional components, such as all commissions, even those paid for work outside ordinary hours into the SG calculation.

3. Enhanced Reporting Through Single Touch Payroll (STP) Employers will need to report both qualifying earnings and SG liability through STP each pay cycle. Previously, reporting could be quarterly or more periodic; the new structure requires consistent, accurate reporting alongside payroll data to help the ATO monitor compliance in near real time.

4. Faster Allocation by Super Funds Super funds will have 3 business days (down from 20) to allocate or return contributions, meaning employees will see their super paid and confirmed much sooner.

5. Revised Super Guarantee Charge (SGC) The Super Guarantee Charge regime — the penalty system for late or missing SG is also being redesigned. Under Payday Super, the SGC will apply per pay period, meaning late contributions could attract interest and penalties more frequently. The new SGC calculation will include shortfalls, compounded notional earnings, administration uplift, and if applicable, choice loadings for failing to meet fund choice requirements.

6. Small Business Superannuation Clearing House Closing As part of the transition, the ATO’s Small Business Superannuation Clearing House will close on 1 July 2026. Small businesses currently relying on this free service must transition to alternative SuperStream-compliant clearing houses or payroll systems.

Why Payday Super Is Happening

The reforms are a response to longstanding concerns about unpaid and late super contributions. According to the government and retirement experts, billions remain uncollected each year under the quarterly regime, costing workers dearly over time. Payday Super aims to boost transparency, reduce gaps in contributions, and ensure retirement savings grow more steadily from year to year.

Research and commentary have suggested that paying super more frequently could deliver thousands of dollars more in retirement benefits for many workers due to earlier and more consistent compounding.

How Employers Can Prepare Now

• Employers are being encouraged to:
• Review and upgrade payroll systems to handle frequent SG calculations and reporting.
• Check employee super details and ensure data quality to avoid rejected contributions.
• Communicate with staff and advisers about the timeline and practical impacts.
• Plan cashflow to align with paying super more often rather than quarterly.

The ATO is urging businesses to start preparing now to avoid disruption and ensure they meet their new obligations when Payday Super becomes law on 1 July 2026.