Australia’s superannuation system is about to undergo one of its most significant overhauls in decades. The Payday Superannuation reform, introduced through the Superannuation Guarantee Charge Amendment Bill 2025 and the Treasury Laws Amendment (Payday Superannuation) Bill 2025, seeks to ensure that super contributions are paid in line with employee wages, not months later.
From 1 July 2026, employers will be required to pay super contributions at the same time they pay wages, instead of the current quarterly system. The intent is clear: improve the financial security of Australian workers, close compliance gaps, and modernise the super system in line with digital payroll infrastructure.
For employers, however, this means a fundamental shift in payroll and compliance practices.
Why Payday Super Matters
According to Treasury, billions of dollars in superannuation go unpaid or are delayed each year under the current quarterly system. Employees lose potential compound returns on those funds, and compliance breaches can go unnoticed for months.
The Payday Super reform forms part of the “Securing Australians’ Superannuation Package” first announced in the 2023–24 Federal Budget. It is designed to:
- Ensure super contributions are made concurrently with wage payments.
- Strengthen the link between work and retirement savings.
- Reduce underpayment risks.
- Enhance transparency through real-time reporting.
How It Works: The “Qualifying Earnings” Framework
Under the new Payday Super framework, employers will be assessed on a new earnings base “qualifying earnings” (QE) to determine the superannuation guarantee (SG) amount payable.
“Qualifying earnings” consolidates and replaces the previous concept of Ordinary Time Earnings (OTE), bringing together payments such as salary sacrifice amounts and other remuneration covered by the expanded definition of “employee” in the Superannuation Guarantee (Administration) Act 1992.
In short, QE simplifies and unifies how employers calculate SG obligations.
The QE day is when the employer pays qualifying earnings to or for an employee. Employers must ensure that super contributions are received by the employee’s fund within seven business days of that QE day to avoid penalties.
Compliance and Penalties: New Rules, New Risks
The Payday Super Bills introduce a revamped penalty system to ensure compliance.
If contributions are not received on time, employers will face a Superannuation Guarantee (SG) shortfall and will be liable for the SG charge, including notional earnings to compensate employees for lost investment returns.
The Bills introduce a scalable administrative uplift amount to replace the old flat administrative component, meaning penalties will vary depending on the severity and frequency of non-compliance. In addition:
- The General Interest Charge (GIC) will apply to the full SG charge amount, not just the shortfall.
- A choice loading will apply if contributions breach the employee’s fund choice requirements.
Employers who persistently fail to comply may face escalating regulatory and reputational consequences.
ATO’s Draft Compliance Approach: First Year of Payday Super
The Australian Taxation Office (ATO) has released Draft Practical Compliance Guideline PCG 2025/D5, outlining how it intends to manage compliance risks in the first year of operation (1 July 2026 to 30 June 2027).
Recognising that many employers will need time to update payroll systems, the ATO’s approach will focus on education and risk-based compliance. Employers will be categorised into high, medium, or low-risk zones based on their SG behaviour:
- Low-risk: Employers who make timely contributions and correct any delays promptly.
- Medium-risk: Employers with minor or corrected shortfalls within 28-days of quarter-end.
- High-risk: Employers with unpaid SG contributions after that 28-day window.
Employers who continue to pay super quarterly without making an effort to align payments with paydays will be considered non-compliant and subject to investigation.
Importantly, if contributions are rejected by a fund but rectified quickly, employers will generally fall into the lower risk category, a recognition of good-faith efforts to comply.
Voluntary Disclosure: Encouraging Transparency
Under the new framework, employers will no longer lodge SG statements. Instead, they can submit a voluntary disclosure statement if they identify a shortfall before the ATO does.
Submitting a disclosure before assessment can reduce the administrative uplift amount and demonstrate proactive compliance — a critical protection in the new system.
The ATO will also utilise Single Touch Payroll (STP) and super fund reporting data to detect underpayments automatically, increasing visibility across the entire superannuation landscape.
Implications for Employers and Payroll Systems
The shift from quarterly to per-pay-cycle super payments means significant operational change for employers.
Some key impacts include:
1. Payroll System Upgrades
Employers must ensure payroll software can automatically calculate and remit super contributions each pay cycle. Businesses using legacy systems may need to upgrade or integrate digital payment solutions that support near real-time super payments.
2. Cash Flow Management
Paying super more frequently will affect cash flow, especially for small and medium enterprises (SMEs) accustomed to quarterly payments. Careful forecasting and budgeting will be essential to manage this transition smoothly.
3. Increased Administrative Efficiency
While initially burdensome, aligning super with wages can streamline processes long-term. Employers can expect fewer errors, reduced reconciliation time, and a lower risk of missed contributions.
4. Greater Accountability
The ATO’s data-matching capabilities mean non-compliance will be more visible and more easily penalised. Employers will need strong internal controls and up-to-date payroll governance frameworks.
Super Funds and Employees: The Benefits
For employees, Payday Super is a win. Superannuation will grow more consistently, reflecting the rhythm of their earnings. The reform is expected to boost lifetime retirement savings by ensuring compound returns start accruing immediately.
For super funds, the reform offers more frequent inflows and improved visibility of employer behaviour. This will enhance fund liquidity, investment planning, and member confidence.
Industry Concerns and Readiness
Despite broad support, there are concerns around timing and readiness. The ATO itself has acknowledged the short implementation window, less than a year from final guidance to start date, as a major risk factor.
Some businesses, particularly those with complex or high-volume payrolls, warn of difficulties in testing and deploying new systems in time.
The ATO’s initial compliance stance reflects this, aiming to guide rather than penalise honest mistakes during the first year.
Nevertheless, employers cannot afford complacency. The penalties for ongoing non-compliance after the transition period will be substantial, both financially and reputationally.
Preparing for Payday Super: What Businesses Should Do Now
Hall Browns recommends that employers begin preparations immediately by:
- Reviewing Payroll Systems: Ensure software supports per-pay-cycle super payments.
- Engaging with Payroll Providers: Discuss system updates and integration timelines.
- Assessing Cash Flow Impact: Reforecast budgets to accommodate more frequent super payments.
- Updating Governance Frameworks: Document processes for monitoring and reporting compliance.
- Training HR and Payroll Teams: Build internal knowledge of the new QE-based system.
- Testing Early: Run parallel pay cycles ahead of 1 July 2026 to identify and correct issues.
- Engaging Advisors: Seek professional advice on transitional planning, SG charge exposure, and ATO risk management.
A Step Toward a Fairer Super Future
The Payday Super reform represents a major cultural and operational shift in Australia’s employment landscape. While it introduces new compliance obligations, it also modernises superannuation payments, aligns with digital payroll systems, and delivers better outcomes for Australian workers.
Employers who act early, investing in systems, governance, and communication, will be best placed to transition smoothly and demonstrate leadership in payroll compliance.
As the reform countdown continues toward 1 July 2026, preparation is not optional; it’s essential.