Payday Super - Yay or Nay?

Payday Super: What You Need to Know About the Upcoming Superannuation Reform

Big changes are coming to how superannuation is paid in Australia. From 1 July 2026, employers will be required to pay super at the same time as wages ushering in the era of Payday Super.

So What Is Payday Super?

Under the Treasury Laws Amendment (Payday Superannuation) Bill 2025, super contributions must be paid on payday, not quarterly. This means:

  • Employers must ensure super reaches employees’ funds within 7 business days of each payday. This is a significant change from the current super process of payments required to be made 28 days after the end of the relevant quarter (eg Apr - Jun 2025, payment due 28 Jul 2025).

  • Contributions will be based on Qualifying Earnings (QE)—a new term that includes ordinary time earnings, salary sacrifice amounts, and other wage components[1].

  • So for businesses that are used to paying super quarterly, streamlining cash flow to make these payments on time will require some adjustment

For Employees: Why It Matters

  • More frequent contributions mean your super starts earning returns sooner.

  • A 25-year-old could be $6,000 better off at retirement thanks to compounding interest. And that’s a great benefit.

  • It helps reduce unpaid super, currently estimated at $5.2 billion annually[2] which is a truckload of cash not being paid.

For Employers: What You Need to Do

  • Update payroll systems to align with the new reporting requirements.

  • Contributions must be processed faster especially for new employees or irregular payments.

  • Prepare for the closure of the ATO Small Business Superannuation Clearing House 01 July 2026[3].

  • Late payments will attract a redesigned Superannuation Guarantee Charge (SGC), including interest and administrative penalties[1].

Exceptions & Flexibility

At the start of the process, some flexibility will apply:

  • New employees: Businesses will be given 14 days to make the first contribution. So the time is NOW to update your onboarding processes and ensure that employee super details are obtained asap.

  • Stapled funds: Up to 42 days if initial contributions are rejected.

  • Exceptional circumstances: Natural disasters or tech outages may allow extensions[3].

How to Prepare

  • Review and test payroll software updates, eg Xero and see how long this process takes for your business.

  • Train payroll teams on new definitions and reporting codes. More information will be released.

  • Assess cash flow impacts of more frequent super payments[4].

  • Hopefully, this will be easier for businesses to manage.

Improvements for Employers Under the New System

  • Improved payment processing and error messaging.

  • Faster validation of employee Tax File Numbers (TFNs) with the ATO (2 business days instead of 3).

  • Employer notification of discrepancies within 2 business days (down from 5).

  • Contributions that cannot be allocated must be refunded within 3 business days (down from 20).

    For employers to avoid rejections and penalties, it’s important employee information is complete and correct. The time to review your current process is now.

    If you would like to book in a payroll review, please book here.


References

[1] www.ato.gov.au

[2] ministers.treasury.gov.au

[3] www.areea.com.au

[4] www.austpayroll.com.au

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