The government is moving ahead with the Payday Super reforms, and employers should start preparing. Treasury has released draft legislation proposing that employers pay superannuation at the same time as they pay salaries and wages to their employees. These changes are scheduled to take effect from 1 July 2026.
Currently, employers have up to 28 days after the end of each quarter to make their super contributions. Under the new rules, this window will be significantly shortened — employers will need to pay super within seven calendar days of paying their employees.
The draft legislation also introduces the concept of “qualifying earnings” (QE), which is generally based on ordinary time earnings. The “QE day” refers to the day an employer pays their employee’s wages.
If an employer does not ensure that contributions reach the employee’s fund within seven days of the QE day, they will become liable for the Superannuation Guarantee Charge (SGC). There are some exceptions, such as a two-week grace period for new employees.
The reforms also bring changes to how interest and administrative costs are calculated. The current flat 10% nominal interest rate will be replaced with the ATO’s General Interest Charge (GIC). Additionally, the current fixed $20 administrative fee per employee per quarter will be replaced by a variable amount — calculated at 60% of the total shortfall plus interest. In practice, this means the costs of late payments could increase.
While it’s proposed that SG statements will no longer be mandatory, employers may still need to make voluntary disclosures if they wish to access potential reductions in administrative penalties.
One positive aspect for employers is that both on-time and late contributions, as well as SGC payments, will remain tax-deductible. However, any penalties will continue to be non-deductible.
The draft also outlines a revised penalty regime for late or missed SGC payments. If the SGC remains unpaid after 28 days, the ATO will issue a notice to pay. Employers will face an initial 25% penalty, which could rise to 50% for repeat non-compliance within a 24-month period. Unlike the current system — where penalties can reach 200% but may be remitted — these new penalties will not be subject to remission.
To simplify the process of correcting late payments, any overdue contributions will automatically be applied to the earliest QE day with an outstanding shortfall.
Finally, from 1 July 2026, the Small Business Superannuation Clearing House will be phased out. Small businesses will then need to make super contributions directly to employees’ super funds, rather than using the clearing house service.
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By Yvonne Shao @ Pitt Martin Tax
