Payday Superannuation

From 1 July 2026 employers will be required to pay their employees’ Superannuation Guarantee (SG) payments at the same time as their salary and wages, replacing the current quarterly system.  The SG contributions to employees' super funds must be received within seven days of payday, with penalties for delays or underpayments (with some exceptions such as for small, irregular payments).

Further details on the changes were released by the government on 18 September 2024, including the following:

1. From the date of commencement (1 July 2026) employers will be liable for the superannuation guarantee charge (SGC) unless contributions are received by their employees’ super fund within 7 days of “payday” – which is the date that the employer makes an ordinary time earnings (OTE) payment to an employee.

2. The SGC will be updated and consist of

• Outstanding SG shortfall: any contributions that remain unpaid when the SGC is assessed. The shortfall calculation will be based on OTE, creating consistency with the calculation of SG contributions. Late contributions paid by an employer before they are assessed for the SGC will reduce the outstanding SG shortfall.
• Notional earnings: an interest component to put employees in the same position that they would have been had the contributions been received in full and on time.
• Administrative uplift: an additional charge levied to reflect the cost of enforcement.
• Once SGC is assessed, additional interest and penalties may apply if the SGC liability is not paid in full.
• The SGC will be tax-deductible, ensuring the income tax consequences for paying employees’ super are consistent.

3. Employers will be required to report both the OTE payment and the total super liability for an employee through Single Touch Payroll, ensuring the SG can be correctly identified.  

4. The ATO Small Business Clearing House will be retired from 1 July 2026 as it is expected that updated payroll software solutions will provide a higher quality and more cost effective way for small businesses to manage their super commitments.  The ATO has committed to working with small businesses to help them transition to the most appropriate platform and providing advice in the lead up to the changes.

Why is this happening?

A total of $1.13 billion in superannuation guarantee charge (SGC) liabilities was raised through SG voluntary disclosures and ATO compliance action in 2023.

Implementing the change will go a long way towards reducing the billions of unpaid superannuation - ensuring that employees receive super contributions more frequently, and effectively benefiting 8.9 million workers by reducing the risk of “super theft” and increasing retirement savings.

The measure will also assist employers to simplify cashflow obligations, by aligning wages and super payments, however employers should ensure that their cashflow can support employee superannuation obligations being paid at an earlier time. 

For more information visit - https://treasury.gov.au/sites/default/files/2024-09/p2024-581438-payday-super-factsheet.pdf