Starting from 1 July 2026, employers in Australia will need to pay their employees’ superannuation contributions at the same time as their salary and wages. This marks a significant change from the current practice, where super contributions are typically made quarterly.
Key Details of the Payday Super Measure.
On 2 May 2023, the Australian Government announced the “Payday Super” initiative. However, as of September 2024, this legislation has not yet come into effect. The Treasury and the Australian Taxation Office (ATO) are working with industry stakeholders to refine the implementation process before the 2026 deadline.
What’s Changing?
Timely Super Payments:
Employers will be required to pay employees’ Super Guarantee (SG) contributions alongside their wages. These contributions must be deposited into the employee’s super fund within 7 days of payday. Missing this deadline could result in penalties under the Super Guarantee Charge (SGC).
Super Guarantee Charge (SGC) Updates:
Outstanding SG Shortfall: Unpaid contributions will be calculated based on Ordinary Time Earnings (OTE) as of the SGC assessment date.
Notional Earnings: Interest will be applied to ensure employees are compensated as if their super contributions had been paid on time.
Administrative Uplift: A charge will cover enforcement costs, with additional interest and penalties if the SGC remains unpaid.
SGC will continue to be tax-deductible, aligning it with the income tax treatment of super contributions.
Changes in Superannuation Processes
Small Business Superannuation Clearing House (SBSCH) Decommission: The SBSCH will be decommissioned from 1 July 2026, as improvements in payroll software offer more efficient super payment options. Small businesses will receive support to transition to commercial alternatives before this date.
SuperStream and Single Touch Payroll (STP) Updates: Super funds will now have just 3 business days (down from 20) to allocate or return contributions, increasing efficiency. SuperStream will be upgraded to improve error messaging, while STP reporting will include both OTE and total super liability for each employee, ensuring accurate SG amounts are recorded.
Though the Payday Super system won’t be in place until 2026, employers should begin preparing for these changes now. The streamlined process aims to ensure employees receive their super on time, and businesses must comply to avoid penalties. Stay updated by following announcements from the ATO and Treasury as the implementation date approaches.