‘Payday super’ is set to change how superannuation guarantee (SG) payments are managed. Here’s a closer look at what’s coming and what it means for employers.
What is Payday Super?
Starting 1 July 2026, employers must pay superannuation guarantee (SG) on the same day as employees’ salary and wages, rather than following the current quarterly payment schedule.
This change aims to close the estimated $3.4 billion gap between what employees are owed and what has been paid. It’s also expected to benefit employees directly – according to the Government, a 25-year-old earning the median income and receiving super quarterly could see a 1.5% boost to their retirement savings by moving to more frequent SG payments.
While this change was announced in the 2023-24 Federal Budget, payday super has yet to become law. However, given the significant adjustments needed, Treasury has already released a fact sheet to help employers prepare for the shift.
How Will Payday Super Work?
With payday super, employers will have seven days from the date they pay an employee to ensure the super contribution reaches their super fund. The only exceptions are for new employees (with payments due after their first two weeks) and small or irregular payments that fall outside the usual pay cycle.
Employers have already transitioned to single-touch payroll (STP) for salary and wage reporting, so payday super is expected to integrate with these existing systems, with some tweaks to STP to capture ordinary-time earnings (OTE) data.
For some employers, the real challenge will not be the compliance cost of making SG payments more frequently but the cash flow implications. Instead of holding 12% of payroll until the end of each quarter, employers will now need to pay it out with each payday. The benefit is that the potential damage to employees is reduced if an employer falls behind on SG payments or becomes insolvent.
What Happens If SG Is Paid Late?
The penalties for late or missed SG payments are already significant, and this approach will continue with payday super.
A super guarantee charge (SGC) applies to late SG payments, including the unpaid super amount, 10% interest per annum, and a $20 administration fee per employee per quarter. Unlike regular SG contributions, the SGC isn’t tax deductible, even if you later make the payment.
Under payday super, penalties increase for repeated non-compliance, and employees will be fully compensated for delays. If you miss a payment deadline, the SGC will include:
- Outstanding SG shortfall: Calculated based on OTE, rather than total salaries and wages.
- Notional earnings: Daily interest on the shortfall from the day after it was due, compounded at the general interest charge rate.
- Administrative uplift: An additional penalty, potentially up to 60%, to cover enforcement costs, which may be reduced if you voluntarily disclose the issue.
- General interest charge: Interest on any outstanding amounts, including the SG shortfall, notional earnings, and administrative uplift.
- SG charge penalty: Additional penalties of up to 50% of the unpaid SG charge if it isn’t paid in full within 28 days of the assessment notice.
As you can see, these penalties can add up quickly. This will be especially problematic for employers who have underpaid staff or misclassified employees as contractors, leaving unpaid SG obligations.
However, unlike the current SGC, the new SGC will be tax deductible (excluding penalties and interest) if it is not paid within 28 days.
Payday super isn’t law yet, but we’re monitoring developments closely. We’ll update you as more details emerge and work with you to ensure you’re prepared once the changes come into effect.
Need help navigating the changes? Contact us today to discuss how we can assist in managing your superannuation obligations.