Understanding Payday Super
Payday Super is coming. Here’s what to expect from July 2026.
From 1 July 2026, a fundamental shift is happening in how you pay your team's superannuation. If you employ staff in your business, you need to understand what Payday Super means for your operations.
The change will affect your cash flow management, payroll systems, and potentially your compliance risk. The plus side of getting to grips with these changes now means you have time to prepare strategically rather than scrambling at the last minute.
Why is this change happening?
The shift to Payday Super serves several purposes.
For employees
Improved transparency and faster contributions mean super will become part of their regular compensation, not something paid months later.
For business
Aligns Australia with international best practice, and operationally, financial management will become more disciplined as the temptation to use super as a cash flow buffer is removed.
For the system
Better integration of super with regular payroll, which reduces the risk that employees miss out on super if a business’s circumstances change.
The intent of these changes is to strengthen the superannuation system and protect employees' retirement savings.
With that in mind, let's look at what's changing and why it matters for your business.
Moving from quarterly to payday
Currently, you pay employees' superannuation quarterly, with payments due within 28 days of each quarter end (28 October, 28 January, 28 April, and 28 July).
From 1 July 2026, you must pay super on each payday - at the same time you pay wages - and it must be received by the super fund within 7 business days.
In other words, instead of holding onto super funds for up to three months, you'll be paying them as frequently as you run payroll.
Change to how super is calculated
Currently: Super is calculated on Ordinary Time Earnings (OTE).
From 1 July 2026: Super will be calculated on Qualifying Earnings (QE).
Qualifying Earnings is broader than OTE. It includes:
Ordinary time earnings
Salary sacrifice contributions
Other payments currently included in wages for super purposes
For most businesses, this won't dramatically change your total super obligations, but it may shift them slightly depending on how you structure remuneration. The key point is that your payroll systems will need to calculate and report QE instead of OTE.
The 12% rate remains unchanged.
Change to Single Touch Payroll (STP) reporting
Currently: You report either OTE or super liability through STP.
From 1 July 2026: You must report both QE and super liability through STP.
This means more frequent reconciliation and tighter integration between your payroll system and super payment processes. Your payroll software will need to be ready for this change.
Change to Super Guarantee Charge
One of the most significant changes is to the Super Guarantee Charge (SGC), which is the penalty applied when superannuation isn't paid on time.
Under the current system, SGC applies if super isn't received within 28 days of the quarter end. It's self-assessed (you lodge an SGC statement), includes 10% per annum interest and a flat administration fee, and isn't tax-deductible.
From 1 July 2026, SGC will apply if super isn't received within 7 business days of payday and will be ATO-assessed rather than self-assessed. Interest will compound daily at the general interest charge rate, with an administrative uplift that varies based on your compliance history. Penalties range from 25% to 50% of the unpaid SGC, depending on prior penalties.
While penalties and interest won't be deductible, the base SGC becomes tax-deductible, which it currently isn't. Also, the move to ATO assessment means that if you miss a payment, you won't be able to control the process. The daily compounding interest and variable administrative uplift mean late payments could cost significantly more than they do today.
Technology improvements
The technology supporting super payments is improving significantly.
SuperStream enhancements include:
Near real-time payments through the new payments platform.
Better error messaging to help you fix issues faster.
Member verification request prevents wasted time and delayed payments.
Fund Validation Service improvements so you are across changes that could affect your ability to make contributions.
Fund processing is being reduced to 3 business days vs 20 business days
Closure of the Small Business Superannuation Clearing House
If you currently use the Small Business Superannuation Clearing House (SBSCH):
It closed to new users in October 2025
Existing users can access it until 30 June 2026
You'll need an alternative solution by 1 July 2026
This means that if you're relying on SBSCH, finding and testing an alternative should be a priority.
What do the changes mean for your cash flow?
Currently, you might hold super funds for up to three months before payment. Some businesses use this as part of their working capital management. From July 2026, that buffer disappears.
If you pay wages weekly or fortnightly, you'll make super payments on the same schedule. For many businesses, this could mean a real shift in how working capital flows through your business.
You’ll need to place more importance on planning around seasonal revenue fluctuations. The discipline of paying super on payday takes away the option to use it as a cash flow buffer, and your financial projections will need to model this new payment pattern.
What do the changes mean for different business structures?
The impact of Payday Super varies depending on your business type.
For service-based businesses with stable payroll, the change is primarily operational, involving adjustments to systems and cash flow planning. If you have seasonal revenue fluctuations, you'll need stronger planning for high-and low-revenue periods, since super payments won't wait for quarterly reconciliation.
If you employ family members, the same rules apply, but consider how this intersects with your family's overall super strategy. And if you're considering structural changes, such as employees vs. contractors or trust structures, factor these new requirements into your planning.
The strategic opportunity
For many businesses, Payday Super will fundamentally shift how you manage your finances. While it may seem overwhelming, those who understand how the changes will affect their cash flow, payroll systems, and data will meet them head-on and continue to thrive.
In our next article, we'll cover the practical preparation steps you can take now to ensure your business is ready for Payday Super. We'll walk through a strategic preparation timeline, systems checklist, and the specific actions that will set you up for a smooth transition.
Key takeaway
Payday Super is coming; it's significant, but with proper preparation, it's completely manageable. The time to understand it is now, not six weeks before implementation.
Need help understanding how Payday Super specifically affects your business? We're working with established business owners to model the cash flow impacts, review system readiness, and integrate this change into broader financial planning. Book a no-obligation call to discuss your specific situation.
Source: ATO
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and/or other advice as may be appropriate having regard to their particular circumstances.