The introduction of payday superannuation is set to transform how Australian businesses handle employee superannuation payments.
Starting 1 July 2026, employers will need to align their super contributions with payroll cycles rather than the quarterly system.
It is crucial for employers to make super contributions for eligible employees from the start of their employment to meet superannuation obligations and avoid penalties.
While this change aims to improve employee outcomes, it also places a new layer of responsibility on business owners.
This payday super guide breaks down the changes, highlights potential challenges, and provides actionable insights to help your business prepare for payday super.
What Is Payday Superannuation and Super Guarantee Payments?
Under the current system, employers are required to pay superannuation quarterly. From July 2026, payday superannuation will mandate that super payments be made with each payroll cycle.
This shift is designed to ensure employees receive their superannuation in real-time, reducing unpaid super issues and aligning with modern payroll practices.
Ordinary time earnings (OTE) are used as the base for calculating super guarantee payments and therefore superannuation contributions. This is an important term for employers to understand.
Why the Change To Super Payments?
The Australian Taxation Office (ATO) has identified a significant gap in unpaid superannuation, with $3.4 billion in super entitlements unpaid annually.
Recent crackdowns include issuing 8,710 Director Penalty Notices (DPNs) in the last financial year, underlining the need for businesses to improve compliance. A DPN can make the Director personally liable for the unpaid tax debts of the company which include Superannuation Guarantee Charge.
Failing to comply with superannuation obligations can also result in a superannuation guarantee (SG) shortfall, which may lead to additional administration and interest charges. .
The introduction of payday superannuation aims to:
- Ensure employees have faster access to their super.
- Reduce unpaid super cases.
- Improve long-term retirement outcomes for employees.
Key Challenges for Business Owners with Eligible Employees
While the benefits for employees are clear, the transition to payday superannuation introduces challenges for businesses:
- Cash Flow Management: Paying super more frequently could strain businesses with inconsistent revenue streams. It’s crucial to reassess cash flow strategies to ensure super is readily available during each payroll cycle.
- Increased Administrative Burden: Employers will need to adjust payroll systems to calculate and process super with every payment. This could mean additional time, resources, or outsourcing to ensure accuracy.
- Compliance Risks: The ATO has ramped up compliance measures, issuing penalties and DPNs to directors for unpaid super. Failing to adhere to payday super requirements could result in steep fines and reputational damage. Additionally, non-compliance may lead to the super guarantee charge (SGC), which includes penalties and interest for late or unpaid super contributions.
Super Funds and Eligibility
To comply with the new payday superannuation requirements, it’s crucial that super guarantee payments are made to complying super funds or retirement savings accounts (RSAs) on time.
These funds must meet the Australian Taxation Office’s (ATO) stringent criteria to be considered compliant. Specifically, a super fund must:
- Be a complying super fund
- Be registered with the ATO
- Have an Australian Business Number (ABN)
- Have a Unique Superannuation Identifier (USI)
Ensuring that your employees’ super funds meet these eligibility criteria is essential to avoid penalties or fines.
Employers have the option to pay super guarantee contributions to a default fund, which is a fund that meets the ATO’s requirements and is chosen by the employer. This can simplify the process, but it’s important to verify that the default fund remains compliant.
By adhering to these guidelines, you can ensure that your super guarantee payments are correctly allocated, safeguarding your employees’ retirement savings and maintaining compliance with ATO regulations.
Payment Due Dates and Frequency
Under the current system, super guarantee payments are due quarterly, with specific due dates as follows:
- 1 July – 30 September: 28 October
- 1 October – 31 December: 28 January
- 1 January – 31 March: 28 April
- 1 April – 30 June: 28 July
However, with the introduction of payday superannuation, employers will be required to make super payments more frequently, such as fortnightly or monthly. Employers have seven days from an employee’s payday for their SG to be received by their super fund. The only exceptions are for new employees whose due date will be after their first two weeks of employment, and for small and irregular payments that occur outside the employee’s ordinary pay cycle.If a due date falls on a weekend or public holiday, employers can make the payment on the next working day.
Compliance and Penalties
Meeting your super guarantee obligations is not just a legal requirement but also a critical aspect of supporting your employees’ financial futures. Failure to comply can result in significant penalties and fines from the ATO. Penalties may be imposed for:
- Late payment of super guarantee contributions
- Failure to pay super guarantee contributions
- Failure to provide required information to the ATO
If you find yourself struggling to meet these obligations, it’s crucial to act promptly.
Making a voluntary disclosure by completing and lodging an SGC statement (NAT 9599) by its due date can help mitigate penalties and personal liability. The ATO is willing to work with employers to establish a payment plan and minimise nominal interest.
The Superannuation Guarantee Charge (SGC) will be updated to reflect the seriousness of underpayment or late payment, with stronger compliance actions for those unwilling to meet their obligations.
This could include additional penalties, making it even more important to stay on top of your super guarantee payments.
For assistance, employers can contact the ATO at 13 10 20 or visit their website.
Additionally, consulting with a registered tax agent or BAS agent like Bishop Collins can provide valuable support in navigating these requirements.
By staying informed and proactive, you can ensure compliance and avoid the costly consequences of superannuation theft or late payments.
How to Prepare for Payday Superannuation and Super Contributions
Here’s a step-by-step guide to ensure your business is ready:
1. Engage Your Accountant or Tax Advisor
Consulting with your accountant or tax advisor is crucial to navigate the changes introduced by payday super. They can help you understand your obligations and ensure you are compliant with the latest regulations. Discussing strategies to avoid DPNs and penalties for late payments may include lodging a late payment offset election to manage superannuation compliance effectively. This proactive approach can save your business from unnecessary fines.
2. Review Your Payroll Systems
- Consult with your payroll provider to integrate super payments into your payroll software. Many systems already support automated payday super processing.
- Ensure accuracy in employee details and super fund information to avoid delays.
3. Update Your Cash Flow Forecast for the Due Date
- Reassess cash flow projections to account for more frequent super payments.
- Identify periods of potential cash shortfalls and secure working capital finance options if necessary.
4. Communicate with Your Team
- Inform your finance and HR teams about the changes and provide training if needed.
- Keep employees updated on how this will benefit their superannuation balances.
5. Leverage ATO Resources
- Use tools and guides provided by the ATO to ensure compliance.
- Stay informed about updates or additional support for small businesses.
The Bigger Picture: Supporting Employees and Your Business
While payday superannuation introduces administrative challenges, it’s an opportunity to strengthen employee satisfaction. Employees will appreciate the faster contributions to their super funds, which can improve morale and retention.
Moreover, businesses that embrace these changes proactively will mitigate compliance risks and position themselves as responsible employers.
Payday Super: A Changing Landscape
The shift to payday super represents a significant change in Australia’s payroll landscape. By preparing early, reviewing cash flow strategies, and leveraging professional advice, your business can navigate these changes smoothly.
At Bishop Collins, we’re here to help you understand and implement these new requirements. Whether you need assistance with payroll systems, cash flow management, or compliance strategies, contact our team for personalised advice.
Don’t wait until the last minute – start preparing today.
Because you’re not alone in business.