‘Payday super’ will overhaul how superannuation guarantee is administered.
From 1 July 2026, employers will be obligated to pay superannuation guarantee (SG) on behalf of their employees on the same day as salary and wages, rather than the current quarterly payment sequence.
This was announced in the 2023-24 Federal Budget.
The legislation has now progressed through Parliament and is in its final stages, with core elements of the regime confirmed. Employers should monitor updates throughout 2025 as further ATO guidance is released.
The Australian Taxation Office (ATO) has a factsheet that explains what this would look like and the upcoming obligations on employers.
The purpose of this is to reduce the unpaid superannuation owed to employees.
A Treasury report on its impact estimates that a 25-year-old median-income earner who is currently paid superannuation quarterly and wages fortnightly could be around 1.5% better off at retirement if they switched to the earlier contribution and payment model.
The estimate is that this initiative could bring in up to $3.4 billion of unpaid super.
Under the proposal:
- Employers will be required to pay SG contributions so they are received by the employee’s superannuation fund within seven business days of payday, aligning contributions with each pay cycle rather than quarterly.
- A “payday” refers to when a qualifying earnings payment is made to an employee (updated wording to match legislative terminology)
- There are two key exceptions:
- For new employees and only for their first two weeks of employment
- For payments made outside a regular pay cycle (e.g., bonuses, commissions, correction runs), which may follow alternative timing rules defined by the ATO.
They envisage that when employers report via the Single Touch Payroll (STP) system, this will assist with some of the workload.
However, this will impact employers’ cash flow, as instead of paying the superannuation quarterly, they will need to have the funds available at each pay cycle to remit the contributions.
It is important to note that paying super late or submitting late returns can result in penalties.
Correct super guarantee (SG) payments involve four steps:
- You must determine if a worker is “for super purposes” an Employer or a Contractor. This is a complex area.
- You then apply the correct super guarantee percentage.
- You have the correct earnings base. It has historically been calculated on Ordinary Time Earnings (OTE); however, draft legislation introduces the new concept of Qualifying Earnings (QE) to create consistency and reduce grey areas. This change should be incorporated into payroll systems as final definitions are confirmed.
- The SG is paid on time within the statutory timeframe.
What happens if SG is paid late?
If superannuation is paid incorrectly, the employer is obligated to lodge a superannuation guarantee charge (SGC), and penalties may be imposed.
The SGC is calculated on the super shortfall plus interest (now aligned with the General Interest Charge) and an administration charge of (for example) $20 for each employee for each quarter.
If the super is not paid on time, additional penalties apply.
The penalties can be pretty severe:
- Shortfall amount
- Interest on the amount
- GIC (General Interest Charge)
- Administration charges
- Administrative uplift penalties up to 60% of the shortfall
- Additional penalties of up to 50% are imposed if the SGC remains unpaid for 28 days after assessment
Under the current law, if you pay super late, it would not be tax deductible (including interest and penalties).
Therefore, paying super late can make it quite expensive.
Most employers pay the super for the March quarter early in April, and the same for the June quarter.
The ATO will also have expanded visibility under Payday Super, using STP‑linked data to detect late or missing payments far earlier than under the previous quarterly arrangement.
We will keep you updated on this area as final details are released.
