The ‘Payday Super’ legislation, announced by the Government in the 2023-24 Budget, aims to align the payment of Superannuation Guarantee (SG) contributions with employees' paydays, meaning employers will be required to make SG payments alongside salary and wages, rather than quarterly as they do now. This change is proposed to begin on July 1, 2026.
The measure is designed to strengthen Australia’s superannuation system and tackle non-payment of superannuation which has a significant impact on retirement outcomes. Employees will benefit from higher retirement savings from receiving their superannuation contributions earlier and more frequently. Employers will benefit from smoother payroll management with less liabilities on their books.
How Will It Work?
From 1 July 2026, employers will be required to make SG contributions on ‘payday’. Payday is the date that an employer makes an Ordinary Time Earnings (OTE) payment to an employee. Each time OTE is paid, there will be a new 7 day ‘due date’ for contributions to arrive in the employee’s superannuation fund, allowing time for movement of funds through the payment system.
An Updated SG Charge
Where employers fail to pay contributions in full and on time, they are liable for the SG charge. The SG charge will be updated for the payday super environment reflecting the seriousness of underpayment or late payment of SG.
ATO’s Compliance Approach
The ATO will have increased visibility of SG contributions across the employer population by matching Single Touch Payroll (STP) data and superannuation fund reporting. This visibility will allow the ATO to proactively identify missing or late SG payments and intervene sooner to ensure employers can get back on track with their superannuation before problems escalate.
What’s Next?
Payday super is not yet law. However, it is important for employers to start planning for the implications of the measure. With increased frequency of payments, cashflow will be a big consideration for small businesses plus the potential adjustments and/or software upgrades needed to payroll systems.
If you’re concerned about the impact of Payday Super on your business, please contact us to discuss your situation; we can support you in planning for this upcoming change.