Key points:
- From 1 July 2026, the Maximum Contribution Base moves from a quarterly cap of $62,500 to an annual cap of $270,830, with corresponding increase in the concessional super contribution cap from $30,000 to $32,000.
- Super contributions may be front-loaded earlier in the financial year rather than spread evenly across quarters, with the financial impact either on an employer or on employees depending on the remuneration structure.
- Employers should review employment contracts, update payroll systems to support per-pay-cycle SG calculations, plan for early-year cash flow pressure, and communicate proactively with affected employees about changes to their take-home pay.
The Payday Super reforms, effective from 1 July 2026, will introduce a fundamental shift in how employers meet their Superannuation Guarantee (SG) obligations.
Alongside the move to real-time SG payments, there are important changes to the Maximum Contribution Base (MCB) that will impact payroll processes, cash flow, and remuneration outcomes, particularly in respect of higher-income employees.
For more information in relation to preparation for Payday Super, see our previous article on what Australian employers need to know before 1 July.
Key changes
- SG payment timing: Employers will be required to pay SG contributions at the same time as salary and wages, with amounts needing to be received by the employee’s super fund within 7 business days of each payday.
- The MCB will move from a quarterly cap to an annual cap.
- Increased thresholds:
- MCB increasing from quarterly cap of $62,500 ($250,000 p.a.) to annual cap of $270,830
- Concessional contributions cap increasing from $30,000 to $32,500
What this means in practice
Under the current quarterly system, SG contributions for high-income employees are generally spread evenly throughout the year, with employers ceasing contributions once the quarterly cap is reached.
From 1 July 2026, this will change materially. Employers will be required to calculate SG on each pay cycle and continue contributing until the annual MCB is exhausted. As a result, SG contributions will be front-loaded earlier in the financial year, rather than spread across quarters.
Impact on remuneration structures
The financial impact of these changes will depend on how employee remuneration is structured:
Total Remuneration Packages
Where employees are engaged on a ‘total remuneration’ basis, the overall employment cost remains fixed. However, the timing of SG contributions will shift, with higher SG contributions earlier in the year, reducing employee’s take-home pay in those periods and increasing it later once the MCB is reached.
Refer to the example in the table below which shows calculations of salary and super under the current rules and under Payday Super.
As shown in the example, employee’s salary for Q1 – Q4 under the current regime is $100,000 and SG is $7,500, however, for Q1 under Payday Super salary decreases to $95,982 and SG increases to $11,518. Noting as well that under Payday Super the amounts of salary and SG for Q2 and Q3 fluctuates and for Q4, salary increases to $107,500 and SG decreases to Nil.
Additionally, due to the increase in the MCB, employers may be required to contribute $2,500 more of SG contributions, which may effectively reduce the employee’s take-home salary by the same amount.
Employers should consider communication to the affected employees to explain fluctuation in the take-home pay and SG.
| Quarterly MCB (current rules) – Total package | Annual MCB (new rules) – Total package | ||||
| Remuneration package (p.a.) | 430,000 | 430,000 | |||
| Payments (per quarter) | 107,500 | 107,500 | |||
| MCB | 62,500 (quarterly) $250,000 (annually) |
270,830 (annually) | |||
| SG rate | 12% | 12% | |||
|
Q1 SG |
Salary
100,000 |
SG
7,500 |
Salary
95,982 |
SG
11,518 |
Total
107,500 |
| Total p.a | 400,000 | 30,000 | 397,500 | 32,500 | |
| Total remuneration | 430,000 p.a. | 430,000 p.a. | |||
| Difference due to higher MCB (employee salary reduction) | (2,500) | ||||
Base Salary Plus SG
For employees on a base salary plus SG arrangement, under the current rules, salary and SG remain constant in each quarter. Under Payday Super, salary remains unchanged, however, the amount of SG payable by the employer increases from $7,500 in Q1 – Q4 under the current rules to $12,000 in Q1 under Payday Super. Furthermore, employers will experience higher SG costs upfront, indicating requirement for careful cashflow management by the employers.
Additionally, in this example, the cost of total remuneration increasing in line with the higher concessional cap due to additional SG cost of $2,500 is likely to be borne by the employer.
| Quarterly MCB (current rules) – Salary + SG | Annual MCB (new rules) – Salary + SG | ||||
| Payments (p.a.) | 400,000 + SG | 400,000 +SG | |||
| Payments (per quarter) | 100,000 | 100,000 | |||
| MCB | 62,500 (quarterly) $250,000 (annually) |
270,830 (annually) | |||
| SG rate | 12% | 12% | |||
|
Q1 SG |
Salary
100,000 |
SG
7,500 |
Salary
100,000 |
SG
12,000 |
Total
112,000 |
| Total p.a | 400,000 | 30,000 | 400,000 | 32,500 | |
| Total remuneration | 430,000 p.a. | 432,500 p.a. | |||
| Difference due to higher MCB (increase in total remuneration) | 2,500 | ||||
Key considerations for employers
These reforms introduce both operational and financial challenges. Employers should:
- Review and update payroll systems to support per-pay-cycle SG calculations and accelerated payment timeframes.
- Assess employment contracts and remuneration structures to understand cost implications.
- Plan for cash flow impacts arising from front-loaded SG contributions and increase in MCB.
- Develop clear employee communication strategies to explain changes in take-home pay patterns.
- Ensure compliance processes are robust to meet the 7-day payment requirement.
Next steps
If you would like assistance in assessing how these changes will affect your organisation or support in preparing for implementation, please contact one of our Employment Taxes team members or your usual Pitcher Partners adviser.
