Insights
Payday Super - What Employers Need to Know About the 2026 Superannuation Changes
‘Payday super’ will significantly reshape how the Superannuation Guarantee (SG) is administered in Australia. Starting 1 July 2026, new obligations will come into effect, changing how and when employers must pay superannuation on behalf of their employees.
What is Changing?
From 1 July 2026, employers will be required to pay superannuation guarantee (SG) contributions on the same day as employee salaries and wages, as opposed to the current quarterly system.
This change is designed to help address the estimated $3.4 billion shortfall between what is owed to employees and what is currently being paid. According to Government estimates, a 25-year-old median income earner who receives their superannuation quarterly could be around 1.5% better off at retirement by switching to more frequent super payments.
Announced as part of the 2023-24 Federal Budget, payday super is not yet law. However, Treasury has released a fact sheet to assist employers in understanding the upcoming changes.
How Will Payday Super Work?
Under payday super, SG payments will be due within seven days of an ordinary time earnings (OTE)* payment. This means that employers will need to ensure that the superannuation contributions are received by their employee’s super fund within seven days of each payday.
Exceptions to this rule include new employees, where the due date falls after their first two weeks of employment, and small or irregular payments that do not occur within the standard payroll cycle.
Many employers already use Single Touch Payroll (STP) to report employee wages and salary information. The payday super system is expected to integrate with these existing electronic systems, with minor adjustments to allow for the collection of OTE data.
For some businesses, the challenge may be cash flow, rather than compliance. Employers will need to adjust to paying SG contributions (12% of payroll) on payday, rather than retaining these funds until 28 days after the end of each quarter. On the positive side, if a business falls behind on SG payments or becomes insolvent, the damage will be minimised.
What Happens if SG is Paid Late?
The penalties for failing to pay SG contributions on time are intentionally severe, and this approach will continue under the payday super regime.
Currently, the Super Guarantee Charge (SGC) applies to late SG payments. The SGC includes the superannuation shortfall, interest of 10% per annum from the start of the quarter, and a $20 administrative fee per employee per quarter. Unlike regular SG contributions, SGC amounts are not tax-deductible, even after payment.
Under payday super, employees will be fully compensated for any delays in receiving SG payments, and stricter penalties will be introduced for employers who repeatedly fail to comply with their obligations. The SGC under the new system will include:
| Component | Details |
| Outstanding SG shortfall | Calculated based on OTE, rather than total salaries and wages as it is currently. |
| Notional earnings | Daily interest on the shortfall amount from the day after the due date, calculated at the general interest charge rate on a compounding basis. |
| Administrative uplift | An additional charge levied to reflect the cost of enforcement and calculated as an uplift of the SG shortfall component of up to 60%, subject to reduction where employers voluntarily disclose their failure to comply. |
| General interest charge | Interest will accrue on any outstanding SG shortfall and notional earnings amounts, as well as any outstanding administrative uplift penalty. |
| SG charge penalty | Additional penalties of up to 50% of the outstanding unpaid SG charge, that apply where amounts are not paid in full within 28 days of the notice of assessment. |
If this proposed legislation is passed, late SG payments could quickly accumulate penalties, creating severe challenges for businesses that underpay employees over time or misclassify workers as contractors, leading to outstanding SG obligations. Unlike the current SGC, the proposed SGC under payday super will be tax-deductible (excluding penalties and accrued interest).
Stay Informed
While payday super is not yet law, it will have substantial implications for Australian businesses. At Modoras, we are committed to keeping you updated on all legislative changes and helping your business navigate these requirements smoothly.
*Ordinary time earnings (OTE) refer to the gross earnings for an employee’s standard hours of work, including over-award payments, commissions, shift loadings, annual leave loadings, and certain allowances and bonuses.
Ready to Take the Next Step?
Staying on top of superannuation obligations is critical for maintaining business compliance and ensuring the best outcomes for your employees. Modoras is here to assist you in preparing for the changes ahead. Contact us today for a personalised consultation and discover how we can help you meet your superannuation requirements with confidence and ease.
