From 1 July 2026, employers will be required to pay superannuation guarantees (SG) on behalf of their employees on the same day as wages and salaries, replacing the current quarterly payment schedule. This change aims to minimise the estimated $3.4 billion gap between what is owed to staff and what has been paid. Additionally, it is expected to enhance outcomes for employees: the Government predicts that a median income earner aged 25, receiving superannuation quarterly and wages fortnightly, could be approximately 1.5% better off at retirement.
Payday super is not yet law. However, given the structural changes required to support the new law, Treasury has released a fact sheet to help employers better understand the implications of the impending change.
How will payday super work?
Under Payday Super, SG payments are due seven days from when an ordinary time-earning payment is made, giving employers seven days from an employee’s payday to make the contribution to their super fund. The only exceptions are for new employees whose due date will come after their first two weeks of employment and for irregular and small payments that occur outside the employee’s ordinary pay cycle.
Over the past few years, employers have started using single-touch payroll reporting for the salary and wages of employees. Payday super may fold into the current electronic systems and some changes may be made to STP to gather ordinary times earning data.
Employers will no longer withhold 12% of their payroll until 28 days after the quarter ends. Instead, they’ll pay this amount on the employee’s payday. This change helps limit the damage if an employer hasn’t been paying superannuation, especially if the business is struggling financially.
What happens if SG is paid late?
The penalties for not paying superannuation guarantees (SG) are punitive. Currently, a superannuation guarantee charge applies to late SG payments, which consists of the employee’s superannuation guarantee shortfall amount, interest of 10% per annum from the beginning of the quarter in which the SG was due, and an administration fee of $20 for each employee with a shortfall per quarter.
Under the payday super system, employees will be compensated for delays in receiving their SG amounts, and larger penalties will apply to employers who fail to comply with their obligations. If you pay late, the SGC is made up of:
| Outstanding SG shortfall | Calculated depending on OTE, rather than total wages and salaries as it is currently. |
| Notional earnings | Daily interest on the late payments from the day after the due date, is calculated at the general interest charge rate on a compounding basis. |
| Administrative uplift | Extra charge taxed to reflect the cost of enforcement and calculated as an uplift of the SG shortfall component of up to 60%, liable to reduction where employers voluntarily show their failure to comply. |
| General interest charge | Interest will be imposed on any outstanding SG shortfall and national earnings amounts, and any outstanding administrative uplift penalty. |
| SG charge penalty | Extra penalties of up to 50% of the outstanding unpaid SG charge, apply where payments are not made in full within 28 days of the notice of assessment. |
If the proposed SGC becomes law, unpaid or late SG payments will spiral out of control. This will be an issue for employers that pay employees less than their entitlements or have miscategorised employees as contractors and have an outstanding SG obligation. The proposed SGC will be tax deductible. Remember, payday super is not yet law.