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:

1. 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.

2. 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.

3. 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.

4. Timeframe Flexibility

There will be limited grace periods for special circumstances—such as new hires, out-of-cycle payments, and events like natural disasters.

5. 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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We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

Small business owners often find themselves navigating the complex landscape of employing contractors versus hiring employees. With the rise of the gig economy, the allure of contracting—where businesses might avoid responsibilities like superannuation, holiday pay, and sick leave—can be tempting. However, it’s crucial to clearly define the nature of the working relationship and understand your obligations to avoid costly penalties.

Determining Employee or Contractor Status

It is essential for small businesses to ascertain whether a worker qualifies as an employee or an independent contractor. This distinction impacts tax obligations, superannuation, and other responsibilities, according to an ATO spokesperson. The ATO provides a guide to help differentiate between the two, debunking common myths that often lead to mistakes by small businesses.

A key consideration in this classification involves assessing the level of control a business exerts over the worker. This includes determining who directs how, when, and where the work is performed. The totality of the relationship—beyond just the contract terms—needs to be examined, especially in light of recent amendments to the Fair Work Act 2009 aimed at closing loopholes.

Contracts alone do not dictate the nature of the relationship or the employer’s obligations. Practical scenarios might reveal that a worker performing tasks typically associated with an employee could indeed be classified as such.

Eight Key Questions to Classify Workers Correctly

Proper classification of workers is vital for your business model. For instance, Uber relies on independent contractors to operate. Here are eight questions to help determine if a worker should be classified as an employee or contractor:

1. Is the Work Integral to Your Business? If the role is crucial to your operations, the worker is more likely to be classified as an employee.
2. Impact on Profits If the worker’s role significantly affects your company’s profits, they are likely an employee.
3. Investment Comparison Independent contractors typically work on specific projects and may not impact your company’s long-term future like an employee would.
4. Specialized Skill Set If the worker offers specialized or unique skills, they may be an independent contractor. Conversely, if their skills are easily replaceable, they may be an employee.
5. Degree of Control A worker who sets their own hours, chooses their work location, and determines the specifics of their job is more likely an independent contractor.
6. Progress Reporting Independent contractors usually provide regular updates and invoices, whereas employees may not.
7. Self-Employment Deductions Independent contractors handle their own self-employment taxes, unlike employees.
8. Multiple Clients Independent contractors typically work with multiple clients, whereas employees usually work for just one company.

If you’re unsure about your classification, consulting with a lawyer, accountant, or your tax office for further clarification is advisable.

Assessing Your Business Needs

While many business owners aim to minimize costs by hiring contractors, some situations necessitate having employees. Assessing your specific needs will help determine the best approach.

Verifying Contractor Compliance

Before hiring a contractor or subcontractor, ensure they are compliant with employment regulations, including payment of worker’s compensation, payroll tax, insurance, and licenses. Adhering to minimum pay rates and National Employment Standards can help mitigate risks.

Businesses in certain industries, such as building and construction, cleaning, courier services, IT, security, and surveillance, may need to report payments to the ATO via the Taxable Payments Annual Report (TPAR), due by August 28 each year.

Contractors, whether operating as sole traders or through a company, partnership, or trust, must have an ABN and possibly other business tax registrations like GST. Typically, they handle their own tax and superannuation responsibilities, as well as sick leave and holiday pay.

Payroll Tax and Superannuation

Payroll tax laws vary by state and territory but generally apply to payments made to contractors under specific contracts. Similarly, while many SMEs believe they do not owe superannuation for contractors, this assumption may be incorrect. The ATO indicates that superannuation might be required for contractors classified as employees for superannuation purposes.

Understanding and correctly applying these rules is crucial to avoid potential legal and financial repercussions.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

In Australia, employers are bound by a set of obligations designed to protect the rights and well-being of their employees. Understanding these obligations is crucial for fostering a fair and productive work environment. Let’s explore some of the key responsibilities’ employers must adhere to in Australia.

1. Single Touch Payroll

• Report payroll information through STP enabled software each time you pay your employees.
• Accurate reporting is important. We use this information in prefill and other government agencies use it when interacting with you or your employees.
• Make an end of year finalisation declaration by 14 July through STP. This helps your employees complete their tax return.
• If you need to update data you’ve already finalised, remember to make the finalisation declaration again.

Get your STP records right

Ensure your payroll governance is the right fit and size for your business by setting up a formal payroll framework with clear documentation. It is important that you put systems and controls in place for accurate reporting of your obligations and ensuring that your key staff have payroll skills and knowledge to perform their role. You must have appropriate processes and procedures to ensure you have checks and balances to pay the right amount, to the right account and by the right date.

2. PAYG withholding

Check out the ATO tax tables as workers may have different PAYG withholding rates.

Note: When you pay your employees, withhold a portion of their pay for tax. Report this through STP and your business activity statements, ensuring you use the same ABN and branch number for both.

Did you hire an employee or contractor?

You need to determine what type of worker you hired because:

• it affects your tax, super and other obligations (such as workers compensation insurance) and the records you are required to keep
• penalties and charges may apply if you get it wrong.

Some workers are always employees, including apprentices, trainees, labourers and trades assistants. Work out if you must pay super for certain contractors at ato.gov.au/employeecontractoressentials

3. Super guarantee (SG)

The SG rate you pay your employees increased on 1 July 2023 from 10.5% to 11%.  This increases progressively by 0.5% each year until it reaches 12% by 1 July 2025.  If you have a new employee and they don’t choose a fund, you can request their stapled super fund details from the ATO.

Mark your calendar

• If you use a clearing house to make super payments, allow extra time to ensure payments are received in your employee’s fund on or before quarterly due dates.
• Quarterly due dates are 28 October, 28 January, 28 April and 28 July.

Penalties

You need to lodge an SG charge (SGC) statement and pay the SGC to the ATO if you miss the payment date even by a day. If you don’t lodge the SGC statement with the ATO within one calendar month after the SG due date, you may face penalties up to 200% of the SGC. In some cases additional penalties may also apply.

4. Fringe Benefits Tax

There are 4 steps to getting FBT right:

Identify the types of fringe benefits provided– If you provide non-cash benefits to your employees, consider whether FBT applies.

Determine the taxable value – Ensure you use approved valuation methods when determining the taxable value of fringe benefits provided.

Lodge an FBT return – You need to lodge your FBT return and pay any FBT you owe by 21 May 2024, unless your tax agent lodges electronically for you.

• If the total value of reportable fringe benefits provided to an employee during the FBT year exceeds $2,000, you must include the grossed-up value through STP or on the employee’s payment summary.
• Contributions your employees have made towards the cost of a fringe benefit are assessable income. Be sure to include them in your income tax return.
  • Keep records to demonstrate your calculations – Ensure you keep relevant records for the required timeframe to support your FBT position.

5. Work Health and Safety (WHS)

• Employers have a duty of care to provide a safe working environment for their employees. This includes identifying and addressing workplace hazards, providing adequate training and supervision, and implementing safety protocols to prevent accidents and injuries.

6. Anti-Discrimination and Equal Opportunity

• Employers must ensure that their recruitment, promotion, and termination processes are free from discrimination and bias. It is illegal to discriminate against employees based on factors such as race, gender, age, disability, or sexual orientation.

7. Fair Dismissal and Unlawful Termination

• Employers must follow fair and lawful procedures when terminating an employee’s employment. This includes providing valid reasons for dismissal, giving employees an opportunity to respond to allegations, and adhering to notice periods as outlined in employment contracts or legislation.

Failure to meet these obligations can result in serious consequences for employers, including fines, legal proceedings, and damage to their reputation. Therefore, it is essential for employers to stay informed about their legal responsibilities and seek professional advice when necessary to ensure compliance with Australian employment laws.

In conclusion, employers in Australia have a range of obligations aimed at protecting the rights and well-being of their employees. By understanding and fulfilling these obligations, employers can create a positive work environment that fosters productivity, fairness, and mutual respect.

How can we help? if you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

The federal government recently announced changes aimed at closing loopholes in the Fair Work Act that allow for intentional underpayment of employee wages and entitlements. As an accounting and business advisory firm, we want to help our small to medium business clients understand how these changes could impact their operations.

Key Changes to the Fair Work Act

Some of the major changes include:

Criminal Penalties for Intentional Underpayment

The government will make intentional and repeated underpayments of employees a criminal offence, with penalties of up to ten years in prison.  This applies to situations where an employer deliberately doesn’t pay lawful entitlements such as the minimum wage, overtime or superannuation.

Reverse Onus of Proof

Currently, the onus is on employees to prove they were underpaid. The new laws will reverse this, meaning businesses must prove they did not deliberately underpay staff.  This puts employers in a much tighter position to prove compliance.

Director Penalties

Company directors could be held personally liable for their company’s underpayment, with potential five year jail sentences if they are found to be intentionally involved. Directors must now actively ensure compliance to avoid penalties.

For a company, the following penalties will apply:

• if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $7.825 million, or
• if the court can’t determine the underpayment, $7.825 million.

For an individual, the following penalties will apply:

• maximum of 10 years in prison
• if the court can determine the underpayment, the greater of 3 times the amount of the underpayment and $1.565 million, or
• if the court can’t determine the underpayment, $1.565 million.
• We (the Fair Work Ombudsman) will be responsible for investigating suspected underpayment offences.

What This Means for Your Business

The changes bring in serious consequences for underpayments that were previously civil matters. As business owners, there are some key actions you should take:

Payroll Compliance Review

We recommend conducting a full payroll audit with an expert to identify and rectify any existing underpayments.  Addressing issues proactively removes legal risks down the track.

Policies and Training

Ensure your payroll and leave policies are up-to-date and that all relevant staff complete compliance training. Proper processes and education help minimise human errors.

Record Keeping

Accurate employee records showing lawful pay deductions and entitlements are critical to prove compliance if issues do arise. Strong records can help defend claims of intentional underpayment. Using the right payroll software and the implementing the right processes will help you ensure your records are accurate.

How can we help? if you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.