Pay Day Super what’s the big hoorah!
Overview of Pay Day Super
Pay day super is a significant change in Australia’s superannuation system, requiring employers to pay super contributions to employees’ superannuation funds on or before each pay day, instead of the current quarterly deadlines. This update is designed to catch out those employers not meeting their obligations, but will have significant ramification for those employers who have been doing the right thing.
Timing of Super Payments
Under pay day super, employers must pay superannuation contributions at the same time as salary and wage payments. This means, if you pay weekly, fortnightly or monthly super must be paid on those cycles.
Most contributions need to be made electronically using SuperStream. Record keeping needs to align with this new frequency, and employers should track each payment to ensure it has been successfully received by the employee’s super fund.
Penalties for Late Super: Superannuation Guarantee Charge (SGC)
Does the SGC change quarterly to the payday cycle? Yes, legislation is in the process of being finalised. Your employee’s super fund’s need to have received the payday super payment within 7 days of paying them, or you will be liable for SGC. The ATO have indicated there will be some changes to penalties, the Taxation Commissioner will have some discretion with infrequent and minor errors, but businesses with repeated non-compliance will face stiffer penalties.
Superannuation calculation errors will result in SGC forms needing to be lodged more frequently. There will be a significant increase in the pressure on getting the payroll correct every time. No making a mistake and having 3 and a half months to identify and fix it, you need to get it right from day one.
For this system to work at all, Superannuation Funds and superannuation clearing houses will need to make significant changes to their systems, they will need real time payment systems, no more taking 7 days to process superannuation payments. Will they be ready by 1 July 2026?
What Are ‘Qualifying Earnings’?
There is a new definition of earning for calculating Superannuation Guarantee, Qualifying Earnings (QE), the new definition includes:
Ordinary Time Earnings (OTE) – wages for ordinary hours, allowances, bonuses.
Salary sacrifice amounts for super.
Other amounts previously included under SG rules.
This replaces the older “salary and wages” concept and aligns SG and SGC calculations.
Timing of Returned Contributions
Super funds will now have three business days (down from 20) to return contributions they cannot allocate. If an employee gives you the wrong member number or DOB the super fund needs to return these payments within 3 days.
Let’s look at the timing, you pay wages on Thursday and process your super at the same time, the clearing house takes a day to access your payment then they take another day to pass it onto the super fund. The super fund is unable to identify the person the contribution was for, so they return the money to the clearing house in three days, the clearing house takes a day to notify you. So, if the system works perfectly you may know by Thursday or Friday of the following week the employee details were wrong. You will need to lodge an SGC statement as the 7-day deadline will have passed, and none of it was your fault, the employee got it wrong.
Action Steps for Employers
Review and update your payroll system to process super on pay day.
Update cash flow forecasts to ensure funds are available each pay run for super contributions.
Set up reminders or automated workflows to avoid missing any pay day super obligations.
Double-check employee details and super fund information before the employee commences working for you, to minimise payment errors.
Consult your payroll provider or accountant about SGC obligations under pay day super, especially regarding pay cycle-based penalties and lodgement requirements.
Some employers may consider changing their pay cycle to fortnightly or even monthly to reduce the administrative burden.
Consider transitioning to pay day super will before 1 July 2026 to ensure your systems can manage the new superannuation payment cycle before it goes live. This may help you avoid some costly penalties.
The ATO are closing their small business superannuation clearing house (SBSCH) from 1 July 2026.
Key dates for the changes:
1 October 2025: No new registrations.
30 June 2026: Last day for existing users. Small businesses must transition to payroll software or commercial clearing houses that integrate with STP and SuperStream
Single Touch Payroll (STP) Reporting
From July 2026, STP reporting will expand to include:
Qualifying Earnings (QE).
Super liability amounts for each pay cycle. Your payroll system must be updated to handle these changes
Key Compliance Challenges for Employers
Payroll System Changes: Most payroll software and internal processes are setup for quarterly super payments, employers will need to ensure their software providers have updated their software before 1/7/2026.
Cash Flow Management: The transition to pay day super will require employers to ensure enough cash is available for both wages and superannuation every pay cycle. This may have a significant impact on some businesses, particularly those with large payrolls and small margins. Slow debtor payments could mean significant extra cost in relation to the superannuation guarantee charge.
Increased Administrative Workload: With superannuation due with every wage payment, payroll teams will need to manage more frequent reconciliations, reporting, and potential error corrections. Those managing their super manually may find it increasingly more difficult to do so.
Error Monitoring and Corrections: More frequent payments create more opportunities for mistakes, such as incorrect fund details, new employees not providing details within time for the pay cycle and calculation errors. This will be an added pressure to those managing the pay roll system.
Conclusion
Pay day super introduces significant changes for employers, especially regarding compliance and risk of penalties. The shift toward pay cycle-based SG means more frequent monitoring and reporting is required. Staying proactive and ensuring your systems and processes are updated will help you avoid costly mistakes and administrative headaches.
What should happen if the Government were serious about assisting business not just penalising it. To be fair the government should introduce expand the proposed discretion regarding genuine mistakes. Like exists in the taxation system, currently if for some reason the banking system went down on the day you were due to pay your employee superannuation you would be hit with the SGC, there is little room for honest mistakes or for circumstances beyond your control, you pay or you pay! There needs to be a self-assessment discretion system, where if a genuine mistake or something beyond the employers control happens more time is given for the employer to pay the contributions.
