The Australian Treasury has released a consultation paper outlining the government’s plan to legislate for employers to pay their employees’ Superannuation Guarantee (SG) contributions on the same day as salary and wages payments.
What is ‘Payday Super’?
“Payday super” refers to a practice where employers make contributions to their employees’ superannuation funds on the same day as they pay their salaries or wages. This practice is designed to enhance the efficiency and transparency of the superannuation system, enabling employees to see a direct correlation between their salary payments and superannuation contributions.
Updates regarding implementation of Payday Super
Set to be applicable to all employers from 1 July 2026, the proposed change includes two potential models:
- An employer payment model requiring SG contributions on the payday.
- A due date model necessitating contributions to be received by the superannuation fund within a certain number of days following payday.
Alongside this, there will be updates to the superannuation compliance framework, including changes to how the superannuation charge is calculated and the introduction of new penalties for non-compliance. The Australian Taxation Office (ATO) will also enhance its measures to recover unpaid superannuation starting from the 2026–27 financial year, providing better insights into employer compliance and improving the ATO’s ability to identify and recover unpaid superannuation.
How will Payday Super impact my business?
The proposed changes to Superannuation Guarantee (SG) contributions could significantly impact business owners’ cash flow.
The shift towards paying SG contributions on the same day as salary and wages, along with a potential shorter due date for contributions, may necessitate adjustments in cash flow forecasting and liquidity management. Business owners will need to ensure that funds are readily available on payday to cover both wages and SG contributions.
The introduction of penalties for non-compliance and considerations about adjusting fees per reconciliation period could add financial pressure.
We will keep you updated as more information becomes available. We anticipate that the major software companies – Xero, Intuit and MYOB will be introduce payday superannuation modules to assist small businesses comply with the new legislation.
Arrange a meeting, and let’s see what the future may bring for your business.