Payday Super in Australia: What’s Changing, Who’s Affected, and How to Prepare – Author Stephanie Penn
Current Super Landscape: Quarterly SG, SGC Consequences, and Compliance Reality
Under today’s rules, most employers remit Superannuation Guarantee (SG) quarterly, with monthly cycles common in larger organisations. Missed or late SG triggers the Superannuation Guarantee Charge (SGC), which replaces deductibility with a statutory charge that includes components like interest; penalties and interest are not deductible. These features are the baseline from which the Payday Super reforms depart, and they’re central to how risk will shift once frequency increases.
If you’re a day late, you’re supposed to do an SGC form… it calculates interest until the date the form is lodged… and anything on that spreadsheet is no longer a tax deduction.
What the Draft Proposes: From Quarterly to (Within) Seven Days of Payday
The Commonwealth has released exposure-draft legislation to move SG from quarterly remittance to payday-aligned contributions, with a proposed start date of 1 July 2026. In practice, this means contributions must be received by the fund within a short window after each pay event (the ATO frames this as “at the same time as salary and wages” from 1 July 2026, subject to passage). Treasury’s package also modernises the compliance framework to make consequences “targeted and proportionate.”
It gives us seven calendar days from salary/wages payment to then make that super payment.
Treasury and ATO materials describe the shift to payday alignment from 1 July 2026, with the detailed timing mechanics to be finalised in the legislative process.
Consultation and Pathway: Exposure Draft to Parliament (and Election Timing)
The exposure draft and explanatory materials were opened for submissions in March–April 2025, building on the “Securing Australians’ Superannuation” consultation (2023–24 Budget measure). The reform is not yet law and remains subject to Parliament; timing may interact with federal electoral cycles and parliamentary scheduling, which stakeholders have flagged as a practical risk for implementation planning.
It hasn’t been approved, but they’re getting the information out there now… clients need to be factoring that into budgets, and cash flow.
Why the Change: Reducing Unpaid Super and Lifting Retirement Outcomes
Policy drivers include reducing persistent unpaid super and building balances earlier to enhance compounding. Treasury has consistently linked payday alignment to improved retirement adequacy; ministerial statements estimate that a 25-year-old median earner could be around $6,000 (≈1.5%) better off at retirement by switching from quarterly to payday SG.
It’s going to make employers more accountable… the government really wants everyone to have a decent amount of super at retirement, because it reduces the burden on the pension.
Operational Shifts: Bookkeeping Cadence, System Changes, and Clearing House Closure
The reform arrives with ecosystem changes. ATO guidance indicates the Small Business Superannuation Clearing House (SBSCH) will close from 1 July 2026, pushing small employers toward integrated payroll-to-fund rails. Draft materials and fact sheets also foreshadow faster fund allocation/rejection cycles to tighten the end-to-end pipeline. These changes lift the premium on automation, data validation, and payroll-fund connectivity.
If you’re not automating this and you’re doing it manually, it’s going to become a lot trickier. Even with automatic processing, which direct debits from your nominated bank account you still have to press the buttons to process it. There’ll be more dates to be aware of (weekly or fortnightly for many) so more processing time means more time on the clock for administration.
Penalties and Deterrence: From Fixed Fees to Proportionate Uplift
Under the exposure draft, the penalty architecture is redesigned so consequences are “targeted and proportionate,” with interest continuing to accrue on shortfalls and administrative penalties calibrated to behaviour and history rather than a blunt fixed amount. The policy intent is to discourage lateness, align enforcement with risk, and increase the likelihood that employees’ entitlements are promptly received.
It’s opening the door for more penalties… once you’re on the ATO’s radar, they’re much more diligent at checking you’re compliant.
Cash-Flow Reality for SMEs: Forecasting, Terms Mismatch, and Liquidity Cushion
Frequent SG outflows will pull cash forward. For SMEs on stretched terms or with lumpy receipts (e.g., construction subcontractors), that shift can magnify working-capital gaps. Industry commentary has warned about feasibility and timing for small businesses; at the same time, policy advocates emphasise the cost to workers from delayed super. Either way, the prudent stance is to model the cadence now.
Small family businesses… will be the ones most affected… it will affect their cash flow. Some get paid on 90- or 120-day terms… forecasting becomes critical.
Practical Preparation: What Accountants Can Do To Help Clients Now
While the Bill is not yet enacted, the direction is clear. Accountants and bookkeepers can add immediate value by helping clients:
- Reforecast cash flow to a per-pay SG cadence; simulate weekly and fortnightly runs, with sensitivity to terms and seasonality.
- Audit payroll systems for payday-aligned SG capability, SuperStream data quality, stapled-fund handling, and receipt-tracking.
- Plan for the SBSCH sunset by mapping a transition to integrated clearing or provider solutions well before 1 July 2026.
- Strengthen controls: calendar prompts, dual approvals for SG batches, and exception handling for rejects; ensure documentation supports voluntary disclosure if needed under the redesigned penalty settings.
- Educate directors/owners on SGC mechanics and deductibility impacts, so “late” is treated as a material governance issue, not a clerical one.
If clients feel they’re not going to be up to the task, now’s the time to outsource the cadence to a bookkeeper or tighten internal processes.
Employee Outcomes: Visibility and Potential Balance Uplift
For employees, earlier and more frequent contributions can improve transparency and accelerate compounding. Treasury’s design notes and ministerial releases highlight the long-run balance uplift from eliminating quarterly lag, subject to investment returns and life-cycle events. The behavioural nudge is also notable: more frequent credits may spur more frequent member engagement.
There should be more interest to enable balances to grow… some employees will be very proactive, others might not even notice.
How Thorntons Can Help: Implementation Playbooks for Perth SMEs
As Perth-based accountants and business advisors, Thorntons supports SMEs and family-owned businesses across bookkeeping, payroll, super processing, tax, and advisory. The firm’s practical approach means building checklists, timetables, and system configurations that reduce friction as frequency increases, while ensuring owners and boards understand the cash-flow, governance, and deductibility implications.
We pick up the phone early, keep the ATO informed if something goes wrong, and get clients back into a compliant rhythm quickly.
About Thorntons: Sectors and Services
Thorntons is a Perth accounting and business advisory practice serving small-to-mid market clients across WA and regional industries. Services cover bookkeeping and payroll, tax and compliance, super processing, management reporting, and transactional and strategic advice for growth-minded family businesses. If your organisation would benefit from a readiness assessment, cash-flow simulation, or a systems audit for Payday Super, contact Thorntons to discuss how the reforms may affect your specific payroll, funding cycle, and governance posture.
Sources (selected)
- Treasury: Payday Super exposure draft (consultation, proposed commencement 1 July 2026; targeted/proportionate penalties).
- ATO: Payday superannuation (measure not yet law; SBSCH closing 1 July 2026).
- Treasury Ministers / Consultation: Design details and consultation windows; estimated $6,000 uplift for a 25-year-old median earner.
- Exposure Draft (PDF): SG reforms and SGC framework (proportionate penalties, interest mechanics).
