A significant shift is coming to the way superannuation is paid in Australia. Under the proposed “Payday Super” reforms from the federal Labor government, employers will be required to make superannuation contributions within seven calendar days of each payday, starting 1 July 2026. This change aims to address chronic issues with unpaid super and improve retirement outcomes for millions of Australians.
With draft legislation currently open for consultation, it’s essential that both employers and employees understand the upcoming changes and how to prepare for them.
Why the Change?
According to the Australian Taxation Office (ATO), an estimated $5.2 billion in superannuation contributions went unpaid in the 2021–2022 financial year. Payday Super is designed to combat this issue and bring Australia’s superannuation payment system in line with modern work patterns.
Key objectives of Payday Super include:
- Ensuring super payments are more timely and transparent
- Reducing unpaid super by increasing employer accountability
- Boosting retirement savings, especially for younger and lower-income earners
Example: A 25-year-old earning the median income could be around $6,000 better off at retirement if contributions were made on payday rather than quarterly.
What Employers Need to Know
Employers will see the most immediate operational impact from Payday Super. Here’s what’s changing:
- New Payment Deadlines
From 1 July 2026, all super contributions must be paid within seven calendar days of each payday, regardless of whether wages are paid weekly, fortnightly, or monthly.
- Updated Terminology: “Qualifying Earnings” (QE)
This new term replaces “Ordinary Time Earnings (OTE)” and will be the basis for calculating super contributions and any shortfalls.
- Closure of the SBSCH
The Small Business Superannuation Clearing House (SBSCH) will be shut down from 1 July 2026. Employers must adopt payroll software that is Payday Super-compliant.
- Timeframe Flexibility
There will be limited grace periods for special circumstances—such as new hires, out-of-cycle payments, and events like natural disasters.
- Revised Penalties
The Super Guarantee Charge (SGC) will remain in place but be redesigned to include:
- Notional earnings (interest)
- Administrative uplifts
- Penalties for failing to meet fund choice obligations
Note: Both on-time and late contributions will continue to be tax-deductible.
Tip for Employers:
Start consulting your payroll software provider now to confirm whether updates are being made to support Payday Super. Early action could prevent payroll headaches in 2026.
Changes to Payroll and Reporting
The implementation of Payday Super means major updates for payroll operations:
▪ Single Touch Payroll (STP) Reporting
Employers will be required to report both Qualifying Earnings (QE) and total super liabilities for each employee per pay cycle.
▪ Retirement of the ATO Clearing House
With the SBSCH shutting down, employers will need to transition to a commercial super clearing house—most modern payroll systems offer built-in solutions.
▪ Error Resolution Standards
Stricter SuperStream rules will be introduced to ensure payment errors are identified and corrected more quickly, enhancing the overall reliability of the system.
Getting Ready for Payday Super
While the start date is set for 1 July 2026, the transition period is key. Employers should use this time wisely.
- Review Payroll Systems
Confirm your systems can process real-time super payments and report detailed contribution data.
- Train Your Staff
Ensure your payroll and HR teams understand the new requirements and how they’ll affect processes and compliance.
- Employee Communication
Let your workforce know what Payday Super means for them. Improved transparency can boost employee trust and retention.
Tip:
Host an internal webinar or lunch-and-learn session to keep your team up to speed and proactively address any questions.
What Employees Can Expect
Employees stand to benefit significantly from Payday Super through faster fund growth, greater transparency, and stronger protections.
- Faster Growth
Super contributions will be deposited more frequently, allowing compound interest to work more efficiently.
- Greater Visibility
Employees can monitor in near real-time whether their super has been paid, reducing the chance of unpaid entitlements going unnoticed.
- Stronger Protections
With tougher enforcement measures and penalties for non-compliance, there’s greater assurance that super will be paid on time and in full.
- Quicker Allocation
Super funds will be required to allocate contributions to member accounts within three business days, a drastic improvement from the current 20-day timeframe.
Conclusion: Preparing for a New Super Era
Payday Super is a win for employees—especially younger Australians—offering faster growth and stronger safeguards. For employers, however, it presents significant operational changes that will require proactive preparation.
To stay ahead:
- Employers must upgrade systems, retrain staff, and plan for real-time payment compliance.
- Employees should monitor contributions and understand how more frequent payments can boost retirement savings.
The move to Payday Super marks a major shift in Australia’s superannuation landscape—but one that, with the right preparation, can benefit all parties involved.
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