Payday Super: Preparing your business for the transition

New deadlines for SG contributions apply to paydays that occur on or after 1 July 2026.

To be on time, your contributions must be received by your employee’s super fund, with all the required information to allocate them to the destination account, by the end of the relevant period after payday.

The ‘usual period’ is seven business days after payday.

An ‘extended period’ applies to the first payday for a new employee and the next payday after an employee chooses a new super fund for their contributions. The extended period is 20 business days after payday. If the end of the usual period for a payday occurs before the end of the extended period that applies to a prior payday, contributions for the following payday are due on the same date as the first.

Yes, it’s confusing, but the example below should help clarify.

The extended period applies to new staff even if they have worked in your business before.

Getting the amount right

The current law requires employers to contribute 12% of their employees’ ordinary time earnings (OTE) to super. From 1 July, this will change to 12% of qualifying earnings (QE).

Qualifying earnings is a new term and includes:

• Ordinary time earnings (OTE), i.e. payments for ordinary hours of work. There are no changes to what payments are considered OTE under Payday Super
• All commissions
• Salary-sacrifice amounts that would be QE if they had not been sacrificed to super
• Earnings paid to workers who fall under the expanded definition of employee, including payments to independent contractors paid mainly for their labour.

For most staff, the change from OTE to QE for SG payments won’t change the amount of super you need to pay. If you have employees who earn commissions for work completed outside their usual hours of work, your required contribution will change to reflect that SG must now be paid on all commissions, not only commissions for work completed during ordinary hours.

If a payment falls into more than one category of qualifying earnings, you don’t need to count it twice.

Maximum super contribution base

Under Payday Super, the maximum super contribution base (MSCB) is defined annually instead of quarterly.

The change means you need to pay 12% of your employees’ qualifying earnings to super for every payday until they reach the MSCB for the year. If an employee’s earnings reach the cap, you can stop paying SG for the remainder of the financial year.

In the 2026–27 financial year, the MSCB is $270,830. The MSCB will change in the future, in line with changes to the annual concessional contribution cap to limit compulsory SG to the level of the concessional cap.

How to prepare

You can get on track now to minimise disruptions.

1. Review and update your payroll and superannuation policies and prepare to publish new versions anywhere staff access them by 1 July.
2. Confirm you have sufficient cash flow to manage more frequent super contributions or take steps now to improve your position.
3. Audit your last super contribution run and ensure any problems have been resolved. The most common reason super funds reject contributions is inaccuracies in your data, like your employee’s TFN, date of birth or super fund membership number. Correct issues now and avoid returned contributions that could cause you to miss deadlines when Payday Super is in place.
4. Establish robust processes to promptly onboard new employees, including verifying their super fund details and TFN.
5. Confirm your payroll provider and/or super clearing house is Payday Super ready. If you have been using the Australian Taxation Office’s (ATO’s) Small Business Superannuation Clearing House (SBSCH), you will need to find a new provider. The SBSCH is closing on 1 July. Your default super fund may provide an employer portal with an integrated clearing house.
6. Provide appropriate training for your payroll staff (if applicable).
7. Communicate the coming change to your employees to reduce misunderstandings and payroll enquiries.

Changes to penalties

The SG charge is applied when you don’t pay your SG contributions on time, you underpay or you make contributions to the wrong super fund (e.g. to your default fund instead of to your employee’s chosen fund).

Payday Super changes how the SG charge is calculated and the penalties that apply if you don’t pay an SG charge assessment on time, as well as the process for the ATO to issue SG charge statements to employers.

Under the current system, you are required to notify the ATO when you have not paid the required amount of SG on time by lodging an SG statement. This lodgement is not required for paydays that occur from 1 July. Instead, the ATO will track your contributions using data from single touch payroll (STP) and super fund contribution reporting, and issue you with an SG charge assessment automatically if you have not met your obligations.

The new SG charge is made up of:

• The amount of SG that remains unpaid on the date of the ATO’s assessment (if any)
• Interest on late contributions from the due date until the date received by the super fund (or the date of assessment if contributions remain unpaid)
• An administration charge of 60% of the amounts above
• Choice loading of 25% of the contribution if contributions were paid to the wrong fund (up to a maximum of $1,200).

You can choose to voluntarily notify the ATO of late or underpaid amounts and any contributions forwarded to the wrong fund if you wish. The administration charge is reduced if you have made a voluntary disclosure and if you have not received another penalty since the introduction of Payday Super. The earlier you notify the ATO of the problem, the larger the discount. If you notify the ATO within 30 days of the affected payday and have not received a previous penalty, the administration charge will be zero.

Under Payday Super, if you don’t pay an SG charge assessment on time, you will receive a penalty of 25% of the amount on the assessment. This penalty rises to 50% if you’ve been penalised during the last two years. These charges are lower than the current maximum penalty of 200%.

The new SG charge is tax deductible to your business, but interest that accumulates after you receive an SG charge assessment is not. The current SG charge is not tax deductible.

ATO approach during the first year

The ATO will take a gentle approach during the first year of Payday Super to give employers time to adjust.

If you fail to comply with the requirements, your business will fall into one of the following categories:

1. Low-risk – You attempted to make contributions of the right amount(s) before the deadline, but not all your contributions were received by a super fund on time. The contributions were received by the relevant funds as soon as reasonably practicable, and you now have no outstanding contributions for the payday. For example, you sent contributions on time, but some were rejected. You updated employee details and re-sent the rejected contributions promptly.
2. Medium-risk – You can’t meet the criteria for the low-risk zone, but you have no outstanding SG by 28 days after the end of the quarter in which the earnings were paid. For example, you didn’t update your systems for Payday Super and continued to pay super quarterly according to the previous deadlines.
3. High-risk – You don’t meet the requirements to be in either the low- or medium-risk categories. You have outstanding SG after 28 days following the end of the quarter in which earnings were paid.

The ATO will not pursue action against you if you’re in the low-risk category. If you fall into the high-risk category, penalties will be enforced with the highest priority, and if you’re in the medium-risk category, the ATO will investigate and pursue penalties if they have the resources to do so.

Frequently asked questions about Payday super

What happens when contributions for April–June 2026 overlap with contributions for July?

The deadline to pay SG contributions for the April–June 2026 quarter is 28 July 2026. Due to the introduction of Payday Super, many paydays that occur in July have contribution deadlines before 28 July. This means that during the transition, contributions from paydays that occurred during the last quarter will be due after contributions from July paydays.

From 1 July 2026, all SG contributions will automatically be allocated to the earliest payday with a contribution owing. As a result, contributions you make that are intended for July paydays will be allocated to what you owe for the previous quarter if you have not already paid those amounts.

You can avoid the problem by paying your April–June contributions early, before your first contribution for July becomes due. If you don’t take this action, your first contributions under Payday Super could be late, but your business is most likely to fall into the low-risk category according to the ATO rules described earlier for the first year of Payday Super.

Do other super contributions have the same due date as SG contributions?

No, only SG contributions are covered by the Payday Super law.

Additional voluntary employer contributions, amounts employees have chosen to salary sacrifice to super, and after-tax contributions employees have deducted from their pay are not included.

You must forward other contributions to super funds according to any deadlines and payment frequency specified in your written agreements with employees.

Many staff will expect that you forward their voluntary super contributions and any additional employer amounts you pay with your SG obligations.

You may wish to review your policies and salary-sacrifice agreements to ensure they are consistent with employee expectations and your payroll system.

How can I verify my employee’s super fund details?

A new member verification request (MVR) is being added to SuperStream. It will confirm your employee is a member of the destination super fund and that your contributions will be accepted, helping to reduce errors and rejected contributions.

Your payroll or onboarding software can access this request. It will be used the first time you send contributions for a new employee and when an employee has chosen a new super fund.

Super funds have until early 2027 to fully implement MVR functionality, but most hope to be ready soon after 1 July 2026.

How can I send contributions faster?

Super funds must be able to accept SG contributions via the New Payments Platform (NPP) by 1 July. The NPP allows instant bank transfers using simple identifiers (PayID) and fast payments (Osko).

The NPP can help to ensure your contributions reach super funds within minutes of your payment.

How long do super funds have to process my contributions?

From 1 July, SG contributions must be processed by super funds (or returned to you if errors can’t be resolved) within three business days. This is less than the previous period of 20 business days.

If your contribution is received by the fund on time but not processed until after your payment deadline, your contribution remains on time according to the law and ATO enforcement rules.