If you employ staff in Australia, the way you pay employee superannuation will change from 1 July 2026. Under Payday Super, superannuation guarantee (SG) contributions must be paid at the same time as salary and wages, for every employee, on every pay cycle.
Here’s what has changed, how it affects your business and what your ongoing obligations look like.
What is Payday Super?
From 1 July 2026, SG contributions must be received by the employee’s superannuation fund within 7 business days of each payday – making superannuation a per-pay-cycle obligation.
Prior to 30 June 2026, employers paid SG contributions quarterly, with funds received within 28 days of the end of each quarter. That meant superannuation obligations could accrue for months before it was actually paid to an employee’s superannuation fund.
Why is this changing?
The ATO estimates 6% of SG payments (equivalent to $6.2BN as of 2022/23) have not been received by employees’ superannuation funds, creating the ‘SG gap’. For employees, missed or underpaid contributions mean reduced retirement savings. For employers, it means increased exposure to penalties, interest charges, and reputational risk.
Payday Super aims to reduce this SG gap by tying superannuation directly to the payroll cycle, making SG contributions more transparent and easier to monitor for all parties. Single Touch Payroll (STP) data, which currently picks up and reports payroll information to the ATO on each pay cycle, will provide almost real-time SG visibility from 1 July 2026.
What is changing
| Before 30 June 2026 | From 1 July 2026 | |
| SG timing | Paid quarterly | Paid every pay cycle |
| SG due date | Received by superannuation fund 28 days after quarter end | Received by superannuation fund within 7 business days of QE day (i.e. payday) |
| Calculation base | Ordinary Time Earnings (OTE) | Qualifying Earnings (QE) |
| Maximum Super Contribution Base | Quarterly | Annual |
| STP reporting | Report one or both of OTE and superannuation liability | Report both QE and super liability via every pay cycle |
| Late payments | Superannuation Guarantee Charge (SGC) self-assessed by employer | SGC assessed by the ATO |
| Superannuation Guarantee Charge (SGC) | SGC not tax deductible
SGC includes:
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SGC is tax deductible
SGC includes:
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| Small Business Super Clearing House | Available for small businesses
Closes permanently on 30 June 2026 |
No longer available |
What are Qualifying Earnings (QE)?
From 1 July 2026, Qualifying Earnings (QE) will be used as the basis for calculating SG. For many employers, the practical difference will be minimal.
| Broadly, QE combines the following into a standardised calculation base: | |
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| QE generally excludes: | |
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Employers should review existing payroll systems to ensure the correct pay types are correctly categorised as QE. It is also an opportune time to review contractors who fall under the expanded definition of ’employee’ for SG purposes, who would also be subject to the new Payday rules.
Maximum contribution base
The Maximum Contribution Base (MCB) is the maximum amount of an employee’s earnings for which an employer is obligated to pay SG. Prior to 30 June 2026, this was a quarterly limit.
From 1 July 2026, the MCB will move to an annual limit, calculated based on the concessional contributions cap. For the first year of Payday Super, this will equate to $270,830 and may impact the way an employee is remunerated, depending on their contractual arrangements. Employers should carefully review the impact of the change to an annual MCB, particularly for those receiving total annual QE in excess of the annual MCB. Changeover from June 2026 quarter to first payday after 1 July 2026
July changeover period
Employers moving from a quarterly to payday cycle need to carefully consider the changeover period from 1 July 2026:
- Quarter ending 30 June 2026 – SG contributions relating to the quarter 1 April 2026 to 30 June 2026 must pay SG contributions by the 28 July 2026 due date.
- Pay runs from 1 July 2026 – SG must be calculated, paid and reported under the Payday rules by calculating QE paid to employees from 1 July 2026 (even if this relates to work that the pay related to prior to 1 July 2026). SG relating to QE must be paid within 7 business days of payday.
However, contributions received on or before 28 July 2026 will first reduce any SG obligations for the 30 June 2026 quarter. To avoid potential penalties in this changeover period, consider aligning your quarterly and Payday Super payments to the earlier of 28 July 2026 or 7 business days from first payday.
What happens if you miss the deadline?
If SG is not received by an employee’s superannuation fund within 7 business days of Payday, the Super Guarantee Charge (SGC) applies. Under Payday Super, the SGC framework changes in several ways.
SGC under Payday Super is tax-deductible and includes:
- The individual SG shortfall amount
- Notional earnings component that compounds daily at the general interest charge (GIC) rate
- An administrative uplift (of up to 60% of the individual final SG shortfall amounts and notional earnings component), which can vary based factors such as compliance history
- A choice loading penalty if the choice of fund requirements were breached
From 1 July 2026, SGC under Payday Super is assessed by the ATO (and is no longer self-assessed by the employer). Penalties of 25% or 50% of the unpaid SGC may apply depending on prior compliance history, with penalties applying per payday rather than each quarter. For a business running a weekly payroll, that means up to 52 potential penalty events per year (instead of the former limit of 4 quarters) if SG is paid late.
The ATO’s approach in year one
The ATO has published a compliance guideline PCG 2026/1 that sets out a risk-based enforcement approach for the first transitional year of Payday Super from 1 July 2026 to 30 June 2027.
Where employers have made genuine efforts to pay on time and promptly correct any errors, they will be assessed as low risk and unlikely to face enforcement action. Employers with unresolved shortfalls after 28 days from the end of a quarter are treated as high risk.
This first-year approach is intended to support businesses transitioning in good faith and should not be seen as a reason to delay preparation.
Payday Super represents one of the most significant shifts to the Superannuation Guarantee regime since its introduction over 30 years ago. While the concept of aligning super guarantee contributions with each pay cycle sounds straightforward, the practical implications run deeper than many employers expect. From changing how contribution obligations are calculated to rethinking long-standing payroll processes, there are several areas businesses need to get across before the new rules take effect. Here’s what you need to know.
How will this affect your business?
Frequency of superannuation payments
For most employers, the most immediate change will be the increased frequency of SG contribution payments by aligning to payday. For example, if payroll is processed weekly, SG contributions will also need to be made weekly. Making SG payments quarterly will no longer be an available option for employers.
For small businesses accustomed to setting aside a lump sum four times a year, this is a meaningful cash flow change. Contributions that were previously a quarterly outlay will now be a regular, recurring line item.
Cash flow management
While the total super liability may not increase, the growing frequency of SG payments is the change most likely to catch businesses off guard. Running cash flow forecasts will help you understand the impact on your weekly and monthly cash position, particularly if your payroll includes variable pay, bonuses, or commissions.
Payroll system readiness
Your payroll software must be Payday Super ready to handle the calculation of SG on QE, updated STP reporting requirements and processing of SG aligned to each pay cycle. If you have not already heard from your payroll provider about their Payday Super update, contact them now. You will also need time to test the configuration before the deadline.
The ATO will apply a 12-month transition period to STP reporting of QE data, meaning STP submissions missing QE data should not be ‘rejected’ until 1 July 2027. This is designed to ease the transition, not to delay preparation.
Clearing house processing times
When you initiate an SG payment, it does not land in an employee’s superannuation fund instantly. Clearing houses typically take 1 to 3 business days to process and forward contributions. The 7 business day window starts from QE day (i.e. payday), and you need to account for this processing time when scheduling your SG payments. If your current clearing house cannot reliably meet that timeline, you should explore alternatives now.
End of the Small Business Superannuation Clearing House (SBSCH)
If your business currently uses the ATO’s Small Business Superannuation Clearing House (SBSCH), you need to act immediately. The SBSCH closed to new users on 1 October 2025 and will shut down permanently on 30 June 2026. You must transition to a SuperStream compliant alternative before 1 July 2026. The ATO has published a transition checklist to assist with this, available at ato.gov.au/Paydaysuper.
Employee data quality
Rejected SG contributions can cause significant business compliance risk. Contributions may be rejected by a superannuation fund for reasons such as incorrect member account numbers, missing superannuation fund details or unverified Tax File Numbers.
Under Payday Super, rejected SG payments must be refunded within 3 business days by the superannuation fund, however the corrected payment still needs to be received by the employee’s superannuation member account within the original 7 business days from Payday to avoid incurring penalties. Cleaning up your employee superannuation data is one of the most valuable things you can do right now to avoid rejected contributions from 1 July 2026 and beyond.
Potential impact on high income earners
High income earners should consider the impact of these changes on cash flow and their personal concessional contributions caps. The timing of SG under the Payday regime may cause caps to be fully utilised earlier in a financial year or potentially could result in inadvertent excess contributions tax implications. Impacted individuals should reach out to their employers to better understand these implications.
What do you need to do before 1 July 2026
- Map your pay types – Confirm which payments fall within QE. Pay close attention to commissions, contractor payments and salary sacrifice arrangements.
- Check your payroll software – Confirm your provider’s Payday Super update timeline and allow enough time to configure and test before go-live.
- Move off the SBSCH which closes 30 June 2026 – if you’re still using it, transition to a SuperStream-compliant solution now.
- Clean your employee data – Every record needs a valid superannuation fund, correct member number and verified TFN. Rejected contributions can trigger a breach if not resolved within 7 days of payday.
- Model the cash flow impact – Forecast what per-cycle super payments look like against your current payroll frequency, headcount and seasonal patterns.
- Review contracts and agreements – Some employment contracts or enterprise agreements may still reference quarterly super schedules. Check these align with the new requirements.
- Assess contractor arrangements – If a contractor is paid mainly for their labour, they may be treated as an employee for SG purposes and fall within Payday Super timing requirements.
- Stress-test your approval workflows – Make sure internal sign-off processes between payroll and payment can meet the 7 business day deadline without bottlenecks.
Ready to get your business compliant?
Payday Super represents a fundamental shift in how the SG regime works for every Australian employer. The deadline is 1 July 2026 and preparation takes time.
If you are unsure whether your payroll systems, clearing house arrangements, or cash flow position are ready for these changes, now is the time to find out.
Contact your William Buck advisor to review your payroll processes and ensure your business is on track. Our team can help you assess your readiness, understand the impact on your cash flow, and work through any contractor or employment arrangement questions that the new rules raise.
