PAYDAY SUPER – Are you ready?
Payday super commences on the 1st July 2026
The key changes are as follows:
1 From the 1st July super contributions will be due within 7 business days of each pay day. The contributions have to be actually received by the superfund within this timeline. The pay day is now referred to as the “Qualifying Earnings day (QE). There will be two circumstances under which this timeframe may be extended.
An extended period of 20 business days will be allowed for first time contributions to a new superfund. This may be for either a new employee or an employee changing funds.
The other is if large scale external events disrupt payroll processing. This may be system outages or natural disasters
2 Qualifying Earnings will be the new earnings base. Currently either ordinary times earnings (OTE) or salary and wages may be used to calculate SGC or the SGC shortfall. The new QE will largely mirror the current OTE for most employers. Ie it will include the ordinary earnings plus commissions, salary sacrifice into super and payments to individuals who are deemed employees under the expanded definition of employees (such as directors, certain contractors and entertainers) OTE are payments to employees for their ordinary hours of work.
Employers will need to ensure the mapping in their payroll software correctly report the new QE .
3 The penalties for late reporting and payment have also substantially changed. The legislation introduces a new “individual final shortfall”. This will represent the unpaid or underpaid contributions at the time that SGC is assessed. If the contributions are late, but paid before the SGC assessment is issued they will reduce the SGC shortfall and thus reduce the interest accruing.
Individual Notional Earnings which is the interest component of the SGC which changes from the current flat 10% to a daily compounding rate set at the General Interest Charge.
Administrative Uplift. The current $20 administrative fee per employee per quarter will be replaced with the Administrative Uplift which can be up to 60% of the final SG shortfall plus notional interest. This is to act as an incentive to make timely payments.
Choice Loading Penalty is a new penalty which applies if an employer fails to comply with fund choice obligations. The penalty equals 25% of the eligible contributions capped at $1,200 per Qualified Earnings Day. This is a real stick to ensure that any employee’s request to change funds is actioned quickly.
4 The quarterly SGC statements will be replaced by Voluntary Disclosure. When completing the voluntary disclosure employers will need to provide sufficient information to allow the notional interest charge to be calculated.
5 Accidental Underpayments in one period will have a flow on effect to every future QE day until rectified. This is due to the fact that contributions are automatically allocated against an employee’s SGC shortfall until it is nil.
6 Additional Penalties and Interest. GIC will apply to the entire unpaid SGC from the day it is due until paid in full. If the SGC remains unpaid for 28 days after it is due the ATO must issue a notice to pay. If not paid within a further 28 days a 25% late payment penalty may apply. This may rise to 50% for repeat offenders.
7 The Maximum Contribution Base now changes from a quarterly assessment to an annual assessment
For employees who salary sacrifice into super they need to ensure that the timing changes do not present them with a Concessional contributions excess. This is due to the fact that if the employee currently pays quarterly the April/May/June contributions are likely to be received by the fund on the 28th July 2026. The fund will then receive a further 51 weeks of contribution in that financial year, meaning the fund could receive 64 weeks of contributions.
If the employer is not on top of SGC then it may become a lot more expensive. If you need any assistance with ensuring you are all set up and ready to go, our team are here to help.
