Changes to the calculation, timing and reporting of employer payments of superannuation guarantee apply from 1 July 2026, under the Payday Superannuation framework.
The new framework requires employers to match payment of superannuation guarantee (SG) contributions with the frequency of paying salary and wages to their employees. The previous system permitted employers to accumulate employees’ SG contributions to be paid on a quarterly basis, whether employees were paid weekly, fortnightly or monthly, or otherwise.
The SG framework is administered by the ATO as lead regulator, who undertakes regular audit and compliance activity to ensure employees are not losing out on their appropriate superannuation entitlements in a timely manner. The ATO estimated there was over $6 billion in unpaid superannuation in 2023–24.1 The new framework is anticipated to address this issue to some extent.
Under the quarterly system, inadequate compliance by employers with these important obligations exposes them to ATO reviews and investigations, penalties in the form of the SG charge, administrative shortfalls and late payment penalties. These risks generally continue under the Payday Superannuation framework.
The SG framework covers anyone that comes within the definition of “employee” for SG purposes, eg it includes independent contractors, sportspeople and performers and company directors.2 This article uses the term “employees” as this broader definition. Under the Payday Superannuation framework, the rules determining eligibility to receive SG has also not changed.
Table of contents
- The new framework
- ATO’s approach to compliance
- Relevant legislation
- Formal ATO and APRA advice and guidance
- Additional ATO resources
The new framework
Calculating the amount
Minimum SG contributions are to be paid at the rate of 12% of “qualifying earnings” or “QE” which generally is made up of:
- an employee’s “ordinary time earnings” (OTE)
- salary sacrificed amounts (unless they are amounts that would not be qualifying earnings if paid to the employee, eg overtime), and
- other amounts indirectly included in salary and wages.
QE is a new concept introduced under the Payday Superannuation framework although OTE is an existing well-known concept.
The new concept generally covers the same payment types as OTE except that although commissions paid solely for work performed entirely outside ordinary hours are excluded from OTE, these are now included in QE. Bonuses paid in these circumstances are however excluded from both OTE and QE.
Other notable exclusions from QE include fringe benefits, superannuation contributions by an employer, shares under an ESS and expense reimbursements.
Timing of the payment
Under Payday Superannuation, SG payments must be paid to an employee’s superannuation fund on a “QE day”, which is the regular payday, defined as the day on which the employer makes a payment of QE for the employee. The QE day for an employee does not change even if other employees are paid on a different day, the payment is processed into the payroll system on a different day, or employers have longer time to report payments to the ATO (eg due to Single Touch Payroll concessions).
Practically, the contribution is regarded to be made on time if it reaches an employee’s superannuation fund within 7 business days of payday. The ATO advises best practice is to pay it on payday ie QE day, giving commercial clearing houses enough time to process payments. Employers have up to 20 business days for the first contribution made to a new employee. Ad-hoc or one-off payments made out of cycle like commissions, bonuses, and back payments or advance payments also have flexibility, generally until the next QE day. There may otherwise be exceptional circumstances affecting employers more broadly where the ATO decides to provide additional time across the board, such as natural disasters or widespread IT and communication outages. This discretion is not available for an individual employer’s exceptional circumstances.3
The higher frequency of payment due dates and possible flexibility under the Payday Superannuation regime means there could be circumstances where an employer has overlapping due dates. For example, contributions for a new employee’s first QE day (QE day 1) are due within 20 business days but if the employee is paid weekly, the second QE day’s due date would fall before the due date of QE day 1. A bunching rule permits the due date for QE day 2 to be extended to the later due date of QE day 1.
What’s changing for super funds?
Superannuation funds should ensure their systems are ready to receive more frequent contributions. The length of time that APRA-regulated superannuation funds will have to allocate or return contributions will be significantly reduced from 20 business days to 3 business days. Significant breaches relating to these requirements can force a breach notification to APRA.4 SuperStream 3.0 standard is designed to support the new requirements, including improved verification and error messages and a New Payments platform as a payment method.
SMSFs will continue to have 28 days after the end of the month to allocate or return contributions.5
Consequences of failing to properly comply with Payday Superannuation
If minimum SG payments are not paid in full and on time for a QE day, employers are liable to the SG charge which is calculated as the total of:
- unpaid superannuation for each employee
- interest on the unpaid superannuation amounts for each employee (reflecting notional earnings)
- administrative uplift amount (60% of sum of (a) and (b)), and
- choice loading if choice of fund requirements are not met.
The ATO will issue a notice of assessment for the SG charge (for paydays from 1 July 2026, employers no longer need to lodge the SG statement). Until the assessment of the SG charge is received, late contributions should be paid to the employee’s superannuation fund. Late contributions reduce the SG charge, but employers may still be liable for components (b) to (d) above. There may be appropriate reductions to the administrative uplift amount, eg good compliance history or voluntary disclosure.6
Once the notice of assessment is received, the SG charge is to be paid to the ATO directly by the due date – the ATO will transfer the shortfall amount and notional earnings to the employee’s superannuation account.
Failure to pay the SG charge within 28 days of assessment exposes employers to a late payment penalty.
Payment of the SG charge relating to QE days are deductible to the employer as of 1 July 2026, including the SG shortfall, notional earnings, administrative uplift amount and choice loading. However, SG charge amounts relating to pre-1 July 2026 quarterly periods under the quarterly system are not deductible.7
General interest charge (GIC) is not deductible, and neither are late payment penalties related to the SG charge.
What do employers need to do?
Employers should review their payroll systems, be up to date with records of their employee superannuation fund details and have processes in place to support more frequent payments. Employers using payroll providers should expect to have received communications about their Payday superannuation readiness and timeframes.
Employers that already coincide their employee SG contributions with pay cycles are likely to be less impacted but should still ensure their processes work such that the superannuation contributions are in their employees’ funds within 7 business days, and particularly, they should review their off-cycle/one-off payment payroll processes.
Regardless, employers should ensure their payroll and superannuation processes support the changes and are able to report QE and superannuation obligations through STP.8
Employers should consider the impact to their cash flow if they are currently making SG payments on a quarterly basis, as changes will be required. Particularly during July 2026, additional funds may need to be set aside to meet obligations for both the June quarter and the July pay days.
The final quarterly payment under the existing system is due on 28 July for the 30 June 2026 quarter. This payment is still required to be met, and if there are delays, employers are required to lodge the SG charge statement and pay the SG charge for the quarter ending 30 June 2026, under the existing system. The late payment offset however is not available unless the contributions were received by the superannuation fund on or before 30 June 2026 and is only eligible for election as a late payment offset for quarters up to and including the 31 March 2026 quarter. Late payments for the quarter ending 30 June 2026 (received on or after 29 July 2026) will be automatically applied under the new Payday Superannuation rules, to the earliest available QE day for which there is an SG shortfall.
Employers currently using the small business superannuation clearing house need to switch to an alternative provider, as it will permanently close on 30 June 2026. Records can be downloaded until 30 June 2026.
The ATO sets out the following steps to work out and pay superannuation:
- Calculate the SG amount to pay.
- Pay SG into a complying superannuation fund.
- Pay SG contributions for each QE day.
- Pay and report through SuperStream (electronically).
- Keep records.
A Payday Super checklist for employers has also been published by the ATO.
ATO’s approach to compliance
The ATO actively conducts compliance activity in this space and has greater transparency due to STP reporting (which must include year-to-date QE), and superannuation funds reporting and can target compliance actions and identify non-complying employers by improved data matching.9
Employers demonstrably making genuine efforts to comply with the new framework by fixing errors quickly can expect the ATO will not review their positions for the first year of Payday Superannuation. The ATO has identified common scenarios where obligations may be missed but the ATO’s focus will be on employers not trying to make changes to increase payment frequency, not fixing errors, or not paying superannuation at all. Employees may also make voluntary disclosures if they have missed a payment, paid it late or paid an incorrect amount.10
Besides the SG charge, and interest and the administrative charge, the ATO can impose penalties, and if no action is taken, the ATO can escalate its actions to issuing Directions to pay, director penalty notices, garnishee notices and potentially legal action to wind up a business.
Relevant legislation
- Superannuation Guarantee (Administration) Act 1992
- Superannuation Guarantee (Administration) Regulations 2018
- Superannuation (Productivity Benefit) (Continuing Contributions) Amendment (Payday Superannuation) Declaration 2026
- Superannuation Guarantee (Administration)(Out-of-Cycle Qualifying Earnings) Determination 2026
Formal ATO and APRA advice and guidance
- Law Companion Ruling LCR 2026/D1 Payday Super: qualifying earnings
- Law Companion Ruling LCR 2026/D2 Payday Super: eligible contributions
- Law Companion Ruling LCR 2026/D3 Payday Super: calculation and assessment of the superannuation guarantee charge
- Law Companion Ruling LCR 2026/D4 Payday Super: application and transitional provisions
- Practical Compliance Guideline PCG 2026/1 Payday Super — first year ATO compliance approach
- Draft Law Administration Practice Statement PS LA 2026/D3 Payday Super: exceptional circumstances determinations
- Draft Superannuation Guarantee Ruling SGR 2026/D1
- APRA letter to RSE licensees: Payday Super Readiness
Additional ATO resources
- Payday Super resources
- About Payday Super
- It’s the final countdown to Payday Super!
- What payments are qualifying earnings
- Payment deadlines for Payday Super
- How to work out and pay super
- Payday Super – how to manage super during the changeover
- What happens if you don’t pay super correctly
- ATO action to reduce the superannuation guarantee gap
- Confirming payroll providers are Payday Super ready
- Payday Super checklist for employers
Footnotes
1 Super guarantee annual employer compliance results, accessed 22 June 2026.
2 Superannuation Guarantee (Administration) Act 1992.
3 Draft Practice Statement PS LA 2026/D3 Payday Super: exceptional circumstances determinations.
4 Section 29JA of the SIS Act.
5 Treasury Laws Amendment (Payday Superannuation) Regulations 2026.
6 Treasury Laws Amendment (Payday Superannuation) Regulations 2026.
7 Under s 26-95 of ITAA 1997 which will be repealed effective 1 July 2026.
8 ATO website, Support your employer clients with their STP reporting, accessed 26 June 2026.
9 ATO website, How we check Payday Super compliance.
10 ATO website, Getting it right: compliance in the first year of Payday Super and PCG 2026/1 Payday Super — first year ATO compliance approach.