Payday Super - The Countdown Begins

Article

Payday Super

The countdown begins February 2026

The Payday Super regime will commence on 1 July 2026, following the enactment of the Treasury Laws Amendment (Payday Superannuation) Act 2025. This legislation aims to ensure that Superannuation Guarantee (“SG”) contributions are remitted in line with the payment of employees’ salary and wages, replacing the existing quarterly contribution model.

This reform is also reflected as a key ATO priority in its 2025–26 to 2028–29 corporate plan, underscoring the Government’s commitment to closing the SG gap. Under the new law, ‘payday’ is defined as a Qualifying Earnings (“QE”) day, and employers must ensure that SG contributions are received by employees’ superannuation funds within seven (7) business days of each QE day. A detailed comparison of the current and new SG rules is provided on the following page.

Potential impacts on business Implementation and the ongoing adherence to Payday Super will increase the administrative burden on employers as they transition to new processes, systems and/or tools.

Employers will require payroll software that automates and validates timely SG payments to super funds.

More frequent super payments will require careful cash flow management to ensure funds are available for each payment.

More frequent transactions and tighter deadlines may increase the risk of mistakes and non-compliance.

While the introduction of Payday Super appears simple, the interdependencies of payroll systems, external clearing houses, superannuation funds and regulators means that a mere oversight could have a significant flow-on effect.

How can we help?

Our People Services team has the national foresight and local insight to assist with: • Superannuation policy and contract updates to comply with the enacted legislation in relation to employees and contractors.

• System reconfiguration and process rewiring to ensure timely and accurate payment of SG. • Pay code analysis to ensure compliance with SG obligations, noting that Single Touch Payroll reporting will soon extend to include both QE and SG liability data, leading to increased ATO visibility.

• Analysing and re-designing employee onboarding and SG processes to mitigate rejection of contributions and to ensure timely return of funds to employee’s superannuation accounts.

• Develop robust internal controls to support appropriate governance and payroll validation checks.

Overview of key differences between the current and new law Implementation and the ongoing adherence to Payday Super will increase the administrative burden on employers as they transition to new processes, systems and/or tools.

Current Law

New Law

•

Quarterly contributions to be received by superannuation funds and allocated to the employee’s account within 28 days after the end of each quarter.

•

Contributions to be received by superannuation funds and allocated to the employee’s account within seven (7) business days after the QE day, with exceptions for: – new employees; – where employer makes contribution to a stapled fund that is rejected; – out-of-cycle payments; and – exceptional circumstances such as a natural disaster.

•

SG obligations calculated with reference to Ordinary Times Earnings (“OTE”).

•

SG obligations calculated with reference to QE. QE is based on existing OTE framework, extending it to capture additional types of earnings.

•

Quarterly maximum contribution base.

•

Annual maximum contributions base.

•

Superannuation Guarantee Charge (“SGC”) comprises • of: – Total individual SG shortfall for the quarter with reference to salary and wages.

– Nominal interest (at 10% per annum).

– Administration charge ($20 per employee per quarter).

The SGC comprises of: – Total of the individual final SG shortfall for the QE day.

– Notional earnings calculated daily based on the General Interest Charge (“GIC”).

– Administrative charge of up to 60% of the SG shortfall.

•

All components of SGC are non-deductible

•

SGC is deductible (excluding GIC and penalties).

•

Part 7 penalties of up to 200% of the SGC.

•

Further penalties of up to 50% of the SGC.

PCG 2026/1 – ATO first year compliance approach The ATO has released PCG 2026/1, which outlines its compliance activity during the first year of Payday Super (1 July 2026 to 30 June 2027) using a risk based approach, which is briefly outlined below: •

Low risk zone employers are those who attempt to pay SG on time and correct errors as soon as is reasonably practicable so that final SG shortfalls are nil.

•

Medium risk zone employers are those that do not meet the criteria to be in the low-risk zone, but all individual final SG shortfalls are nil by 28 days after the end of the relevant quarter in which the qualifying earnings were paid.

•

High risk zone applies if the employer has one or more individual final SG shortfalls greater than nil for their employees after 28 days following the end of the quarter in which the qualifying earnings were paid.

The PCG 2026/1 states that it applies only to QE days from 1 July 2026 to 30 June 2027 and it does not apply to QE days on or after 1 July 2027. Hence, the urgency for employers to action remains paramount.

Anthony Kazamias

Derrick Pereira

Partner

Manager

p +61 7 3222 8390 e akazamias@pitcherpartners.com.au

p +61 7 3222 0005 e dpereira@pitcherpartners.com.au

Adelaide | Brisbane | Melbourne | Newcastle | Perth | Sydney

Pitcher Partners is an association of independent firms. An independent Queensland Partnership 84 797 724 539.

Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.

pitcher.com.au