Key points
- From 1 July 2026, employers must ensure superannuation contributions are received by employees’ funds within seven business days of each payday (Qualifying Earnings day).
- The ATO has released PCG 2026/1, setting out a risk-based compliance approach for the first year of the new regime (1 July 2026 – 30 June 2027).
- Businesses should act now to review payroll systems, clearing house arrangements, onboarding processes and cash flow planning before the 1 July 2026 start date.
- The ATO’s Small Business Superannuation Clearing House will close — affected employers must transition to an alternative SuperStream-compliant solution.
What is Payday Super?
Payday Super is a significant reform to Australia’s superannuation system, 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 below.
Overview of key differences between the current and new law
| Current Law | New Law |
|
|
|
|
|
|
|
|
|
|
|
|
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 riskbased 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.
What businesses need to know
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.
- ATO visibility and compliance will increase – realtime STP reporting of QEs and SG will enable the ATO to more readily identify unpaid or late superannuation.
- Technology readiness is critical – engagement with payroll providers and clearing houses will be important to understand system changes, testing and implementation timelines.
- Clearing house arrangements may need to change – the closure of the ATO’s Small Business Superannuation Clearing House means affected employers must transition to alternative SuperStreamcompliant solutions.
- Payroll, HR and finance processes will need review – employers should assess payroll cutoffs, approvals, onboarding and super choice processes to ensure timely and accurate payments.
- Cash flow impacts should be considered – more frequent super payments may require changes to cash flow management, particularly for variable pay and bonus cycles.
- Employee communication – employers should consider proactively communicating the Payday Super changes to employees, particularly where payment timing or super contribution reporting may differ from current practices.
- Payments to contractors – consideration should be given to the impact of Payday Super on contractor arrangements, particularly where contractors fall within the extended definition of employee and SG is required to be paid to them.
What to do next
Given the 1 July 2026 start date for Payday Super is fast approaching, now is the time for employers to act. We recommend the following steps:
- Conduct a readiness assessment of payroll systems, clearing house arrangements, onboarding processes and contractor classifications.
- Engage your payroll software provider and clearing house to understand their Payday Super readiness timeline and any required system upgrades or transitions.
- Review and update pay codes to ensure alignment with the new QE definition.
- Run test pay cycles to identify processing or timing issues before go-live.
- Assess cash flow implications and update treasury or cash management practices as needed.
- Communicate changes to employees and relevant internal stakeholders.
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.
If you’d like to explore how we can support and guide you through these changes, please contact our team.
