The introduction of “payday super” is set to transform how the superannuation guarantee (SG) is managed. Here’s an overview of the initial details and upcoming requirements for employers.

Starting July 1, 2026, employers will be required to pay the SG for their employees on the same day as wages are paid, rather than the current quarterly payment schedule. This accelerated payment structure aims to reduce the estimated $3.4 billion gap between what employees are owed and what is actually paid. The Government estimates that a 25-year-old earning the median income, currently receiving super quarterly, could be approximately 1.5% better off at retirement if SG is paid the same time with wages.

While payday super was announced in the FY2023-24 Federal Budget, it is not yet legislated. To help employers understand the upcoming changes, the Treasury has released a fact sheet outlining the implications of these reforms.

How Will Payday Super Work?
With payday super, SG payments will be due within seven days of an employee receiving their regular earnings. In most cases, this means employers will have seven days after payday for SG contributions to reach the employee’s super fund. Exceptions will apply to new employees (whose due date is after their first two weeks of employment) and for small or irregular payments outside the regular pay cycle.

Employers have largely moved to Single Touch Payroll (STP) for salary and wage reporting in recent years, and it is expected that payday super will be integrated into this existing system, with some adjustments to STP to include ordinary time earnings (OTE) data.

For some employers, the main impact of payday super will be related to cash flow, rather than compliance costs. Instead of holding 12% of payroll until 28 days after the end of the quarter, employers will need to pay this amount on the employee’s payday. However, the advantage is that if a business falls behind or becomes insolvent, the resulting damage will be minimized.

Late SG Payments and Penalties
Penalties for late or underpaid SG contributions are intentionally severe, and this approach will continue with payday super.

Currently, a Superannuation Guarantee Charge (SGC) is imposed on late SG payments, including the SG shortfall amount, a 10% annual interest charge from the start of the quarter, and a $20 per employee administration fee per quarter. Unlike typical SG contributions, SGC amounts are not tax-deductible, even once paid.

Under payday super, employees will be fully compensated for any delays in SG contributions, and higher penalties will apply for employers that repeatedly fail to meet their obligations. If an SG payment is late, the SGC will include:

• Outstanding SG Shortfall: Calculated based on OTE rather than total wages.
• Notional Earnings: Daily interest on the shortfall amount, compounded from the day after the due date.
• Administrative Uplift: An additional enforcement charge, up to 60% of the SG shortfall, subject to reduction for voluntary disclosure.
• General Interest Charge: Interest on any outstanding amounts, including shortfalls and administrative penalties.
• SG Charge Penalty: Additional penalties of up to 50% of any unpaid SGC, if not paid in full within 28 days of the assessment notice.

If the proposed SGC becomes law, late SG payments could quickly spiral into larger liabilities, particularly for employers who consistently underpay or misclassify employees as contractors. However, unlike the current SGC, the new SGC will be tax-deductible (excluding penalties and interest accrued if unpaid within 28 days).

Payday super is not yet law, and we will keep you informed as updates occur and work with you to navigate the changes effectively once the details are confirmed. If you have any questions relating to superannuation, feel free to contact Bates Cosgrave.