Attention Employers: Payday Super Begins 1 July 2026
- Josh Tilley
- Nov 26
- 2 min read
The Government has passed legislation introducing Payday Super, a significant reform that will change how employers meet their superannuation guarantee (SG) obligations. From 1 July 2026, employers must pay super within seven business days of each payday, instead of quarterly. The aim is to close the estimated $5 billion SG gap and ensure employees receive their entitlements on time. While well intentioned, the Government once again appears not to have considered the practical realities for small and medium sized businesses that are already under pressure from rising wages and increasing operating costs.
What Is Changing?
Employers must pay super every pay cycle, within seven business days of paying wages.
Contributions will be based on Qualifying Earnings, which broadly align with Ordinary Time Earnings.
Cloud payroll platforms, including Xero, are already developing updates to automate Payday Super, allowing contributions to be processed as part of the pay run itself.
The ATO has issued Draft PCG 2025/D5, outlining a first-year compliance approach using low, medium, and high-risk classifications.
ATO’s First-Year Compliance Approach (1 July 2026 – 30 June 2027)
Low risk: Employers who pay on time and promptly correct any delays.
Medium risk: Employers who continue with quarterly payments despite the new rules.
High risk: Employers who make insufficient or consistently late contributions. The ATO will prioritise compliance activity for high-risk employers.
What Employers Need To Do Now
Employers should begin preparing well before the 1 July 2026 start date. Key steps include:
Reviewing onboarding processes to ensure the correct fund details and member information are captured.
Checking contractor arrangements where individuals may fall under the expanded SG definition of an employee.
Updating payroll systems for Payday Super timing and the annual maximum contribution base.
Ensuring all wage codes are correctly configured for SG purposes.
Reviewing clearing house arrangements and current remittance processes.
Assessing Single Touch Payroll reporting changes required for Payday Super.
Our View
This reform is one of the most significant changes to the SG framework since its introduction. Moving from a quarterly cycle to a payday cycle will require stronger governance, updated systems, and closer oversight of payroll processes. The shift to seven business days from quarterly is extreme and we expect small and medium sized businesses will struggle with the impact on cash flow. A more measured transition would have been preferable. Introducing monthly super payments for small and medium sized businesses for an interim year before shifting to a seven-day deadline would have provided a more practical and manageable pathway to full implementation.
Cloud payroll providers are already adapting their systems, which should ease implementation for many businesses. However, employers should not assume compliance will be automatic. Internal processes and system configurations will still require careful review.
Need Assistance?
Payday Super will bring greater ATO visibility and more proactive compliance monitoring. Our team can assist with reviewing payroll systems, SG configuration, wage code mapping, and broader governance practices to ensure your business is ready.
