From 1 July 2026, Australian employers will face one of the biggest payroll compliance changes in years.
The Australian Taxation Office (ATO) is introducing Payday Super, which will require businesses to pay employee superannuation at the same time as wages.
For many small businesses, this will mean changes to payroll processes, cash flow planning, and how super is reported through STP.
In this article, we explain what the new rules mean and how your business can prepare.
What Is Payday Super?
Currently, employers must pay Superannuation Guarantee (SG) contributions at least quarterly.
From 1 July 2026, this will change.
Employers will need to pay super contributions on or very close to payday instead of waiting until the quarterly deadline.
This means that if you run payroll weekly, fortnightly, or monthly, your super payments will need to follow the same schedule.
Updated Super Calculation Rules
From 1 July 2026, superannuation will be calculated as 12% of an employee’s qualifying earnings (QE).
This introduces a new concept called Qualifying Earnings (QE), which expands the current definition of Ordinary Time Earnings (OTE).
Qualifying Earnings will include:
- ordinary time earnings (OTE)
- additional payments that were not previously included in OTE
This change means that some payments that were previously excluded may now be subject to super, potentially increasing employer super obligations.
Need Help Preparing for Payday Super?
OTE vs QE – Superannuation Changes from 1 July 2026
The diagram below explains the difference between Ordinary Time Earnings (OTE) and the new Qualifying Earnings (QE).
SUPERANNUATION CALCULATION (FROM 1 JULY 2026)
QUALIFYING EARNINGS (QE) = 12% SUPER
Includes:
– Ordinary Time Earnings (OTE)
• Base salary
• Wages
• Ordinary hours
PLUS
– Additional Payments
• Certain allowances
• Some paid leave types
• Other earnings previously excluded
Before 2026: Super = % of OTE only
From 2026: Super = 12% of QE (OTE + more payments)
Why the Government Is Introducing This Change
The goal of Payday Super is to reduce the amount of late or unpaid super across Australia.
By aligning super payments with payroll, the system will:
– improve transparency for employees
– help workers track their super contributions sooner
– reduce unpaid super
– give the ATO better visibility of employer compliance
How STP Phase 2 Connects to Payday Super
Most employers are already reporting payroll information through Single Touch Payroll (STP).
Under STP Phase 2, more detailed payroll information is reported to the ATO each time payroll is processed.
When Payday Super begins:
– super liabilities reported through STP will be matched with super fund payments
– the ATO will be able to detect unpaid or late super much faster
– payroll reporting and super payments will be closely linked
This means accurate payroll reporting will become even more important.
Other Important Changes Businesses Should Know
Quarterly Super Payments Will Disappear
Currently, super contributions must be paid four times per year.
From 1 July 2026, super will generally need to be paid each pay cycle.
Timing of Super Payments
Under the new rules, super contributions must:
- be paid on or around payday, and
- be received by the employee’s super fund within 7 business days of payday
It’s important to note that:
- the date the super fund receives the contribution determines compliance (not when you process the payment)
- some exceptions may apply, such as extended timeframes for new employees
Because of this, employers will need to ensure their payment systems and clearing processes are fast and reliable to avoid late payments and penalties.
Super Must Reach the Fund Quickly
Super contributions will need to arrive in the employee’s super fund within a short timeframe after payday.
This means businesses must allow enough time for payment processing, clearing house processing, and fund allocation.
Faster Penalties for Late Super
Because the ATO will have real-time payroll data through STP, late payments will be detected much sooner.
If super is paid late, employers may face:
– the Super Guarantee Charge (SGC)
– interest on unpaid super
– additional administrative penalties
Penalties
Now
Penalties are a maximum of 200% of the SGC, which can be remitted in part or in full.
From 1 July 2026
Penalties are 25% or 50% of the unpaid SGC, depending on any prior penalties.
Need Help Preparing for Payday Super?
The Small Business Super Clearing House Will Close
Another important change is the closure of the ATO’s Small Business Superannuation Clearing House (SBSCH) from 1 July 2026.
Businesses currently using this service will need to move to another super payment solution, often through their payroll software.
What This Means for Small Businesses
Cash Flow Planning
Previously, super could be held for up to a quarter before payment. Under Payday Super, contributions will need to be funded every pay run.
Payroll Processes
Payroll systems will need to support STP Phase 2 reporting, automated super calculations, and faster super payment processing.
Payroll Accuracy
Because payroll and super reporting will be closely monitored by the ATO, it will be essential to ensure employee super fund details are correct and payroll is processed accurately.
How to Prepare for the 2026 Super Changes
Here are a few practical steps:
– review your payroll software setup
– check how your business currently pays super
– ensure employee super fund details are correct
– review cash flow planning for more frequent super payments
– work with your bookkeeper to ensure STP reporting is accurate
Final Thoughts
The introduction of Payday Super will significantly change how Australian businesses manage payroll and superannuation.
While the goal is to protect employees and improve retirement savings outcomes, many businesses will need to adjust their payroll systems and processes before 1 July 2026.
Need Help Preparing for Payday Super?
At Books and Balance, we help small businesses stay compliant while keeping payroll and bookkeeping simple.
Our services include:
– payroll setup and management
– STP compliance
– superannuation processing
– Xero bookkeeping and automation
Book a free consultation with our team to review your payroll and super processes before the new rules begin.
