Key changes to super guarantee
From 1 July 2026, employers must pay super at the same time as wages. Let’s explore what Payday Super means, how it impacts your business, and how to prepare.
What is Payday Super?
Payday Super is a change to how you calculate and when you pay your employees' super guarantee. At the moment, Super Guarantee (SG) contributions are required to be paid quarterly into your employees’ super accounts.
From 1 July 2026 employers will need to pay employees their super guarantee on payday, at the same time as their salary and wages. The employer must pay the employees’ super on payday – whether it’s weekly, fortnightly or monthly. If your business already pays super with salary and wages, you might not need to make any changes.
Super guarantee is:
• calculated as 12% of qualifying earnings (QE), which is a new term that brings together ordinary time
earnings (OTE) and other payments
• paid to an employee's super fund on payday and received by the super fund within 7 business days
(unless an extended timeframe applies, such as for new employees).
What Payday Super means for your business?
Payday Super may make super obligations easier for some businesses by reducing missed payments and avoiding SGC penalties. However, many employers may need to upgrade payroll systems, adjust their payment processes, and plan for tighter cash flow to handle more frequent payments and real-time ATO reporting.
Here are key areas to understand about Payday Super:
A) When to pay super: From 1 July 2026, you must pay super at the same time as wages. Contributions need to reach the employee’s fund within seven business days of payday.
B) Qualifying earnings: Payday Super introduces Qualifying Earnings (QE): the amount payable to an employee on their regular pay cycle. QE determines how much super you owe each time you run payroll, now called QE day.
C) Super guarantee charge (SGC) changes: The penalty for late or missing super will align with the new payment frequency. Employers who don’t pay within the required timeframe may face additional charges and compliance action.
There are a few exceptions to the seven-day rule, such as: first-time super payments for a new employee and payments made outside the usual pay cycle.
How you can prepare for Payday Super?
Start planning now to make the Payday Super transition smoother:
- Check employee data: Make sure all details (name, TFN, super fund info) are correct in your payroll software to avoid delays.
- Update onboarding: Capture choice of fund early for new hires to prevent bounce backs.
- Plan for cash flow: More frequent payments may mean adjusting budgets and forecasts.
- Train your team: Ensure payroll and finance staff understand the new rules and timelines.
- Review payroll systems: Confirm your software can handle more frequent super payments.
- Stay informed: Keep up to date with ATO guidance and legislative updates.
What is Pay Day Super and when will it start?
Pay Day Super is a proposed change requiring employers to pay employees' superannuation contributions at the same time as wages and salaries are paid, rather than quarterly.
The Federal Government has proposed that Pay Day Super commence from 1 July 2027, subject to the legislation being passed.
How does Pay Day Super differ from the current system?
Currently, employers can pay superannuation quarterly. Under Pay Day Super, super contributions will need to be paid within a short period after each payroll is processed.
Why is the government introducing Pay Day Super?
The aim is to:
- Ensure employees receive their super entitlements sooner.
- Reduce unpaid super.
- Improve transparency and compliance.
- Help employees earn additional investment returns over their working life.
Will Pay Day Super affect employees?
Employees will generally benefit as their super contributions will be deposited more frequently into their super funds, allowing their retirement savings to grow sooner.
How will Pay Day Super affect employers?
Employers will need to:
- Process super payments more frequently.
- Maintain accurate payroll records.
- Ensure sufficient cash flow to meet wage and super obligations simultaneously.
- Review payroll systems and processes.
Will small businesses be affected?
Yes. All employers, including small businesses, will need to comply with the new requirements. Businesses should begin reviewing their payroll processes well before the commencement date.
Do employers need new payroll software?
Not necessarily. However, employers should check with their payroll software provider to ensure their system is capable of handling more frequent super payments and reporting requirements.
What happens if super is paid late?
Late super contributions may result in:
- Super Guarantee Charge (SGC)
- Interest charges
- Administrative penalties
- Loss of tax deductions for late-paid super
Will quarterly Super Guarantee reporting still apply?
The current quarterly due dates are expected to be replaced by the new Pay Day Super framework, with super being paid much more frequently. Further details will be confirmed once legislation is finalised.
How can businesses prepare for Pay Day Super?
Businesses should:
- Review cash flow forecasts.
- Ensure payroll software is up to date.
- Verify employee super fund details.
- Automate payroll and super processes where possible.
- Seek advice from their accountant or bookkeeper.
Will Pay Day Super increase business costs?
The superannuation guarantee rate itself is not increasing because of Pay Day Super. However, businesses may incur additional administrative costs if their payroll processes are not automated.
What are the benefits of preparing early?
Preparing early can help businesses:
- Avoid compliance issues.
- Improve cash flow management.
- Reduce payroll errors.
- Transition smoothly when the new rules commence.
About the author
Nish Shah