Linkedin
Facebook
Email
more
AUTHORS
(Updated October, 2025)
The ATO is reining in superannuation compliance with Payday Super
Payday Super is the biggest change to the payroll landscape since the Australian Taxation Office (ATO) introduced Single Touch Payroll (STP) in 2018.
The substantial changes create new challenges for tax, payroll and human resources teams across all organisations.
Starting 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) contributions every pay cycle, instead of each quarter. This reform will increase SG transparency, with employees being able to check contributions after each payday rather than waiting up to four months.
The changes are designed to ensure employees receive their SG contributions in a timely manner and are poised to increase the employee-initiated SG notifications both to the ATO and the Fair Work Ombudsman, which is a newly implemented avenue for employees to report non-compliance.
Payday Super bills - parliamentary timeline
A parliamentary sitting occurred on 9 October 2025, introducing the following two bills to the House of Representatives with the view to implement Payday Super elements:
- Treasury Laws Amendment (Payday Superannuation) Bill 2025
- Superannuation Guarantee Charge Amendment Bill 2025
The proposed reforms to Payday Super were originally announced on 2 May 2023, with the key difference from existing requirements being that SG contributions are to be made in alignment with pay cycle frequencies (within seven calendar days from the date of payment of salaries/wages), instead of the existing quarterly basis, from 1 July 2026.
In the Parliamentary sitting on 9 October, Treasurer Jim Chalmers highlighted that whilst most employers do the right thing, some disreputable employers are exploiting their employees. The Treasurer also emphasised that, due to being an employee entitlement, unpaid SG is a form of wage theft, with the Bill aimed at putting a stop to this.
With the recent criminalisation of wage theft, which came into effect from 1 January 2025, it is therefore crucial that employers take measures to ensure compliance with regulatory requirements in relation to wage payments, including SG.
October 2025 changes to Payday Super
The key differences between the draft exposure released in March 2025 and the new Bills that entered Parliament are outlined below:
- Instead of seven calendar days to make contributions from the pay date, it will be seven business days.
- Instead of 21 calendar days to contribute to funds for new employees, employers will now have 20 business days.
- In addition, there will be an expansion of this timeframe pertaining to contributions to new funds for existing employees; instead of calendar days, the contribution timeframe measurement will transition to business days.
- There may be the ability for any penalty assessment to be reduced to nil, where it is determined by the Commissioner that an exceptional circumstance has arisen.
- Only contributions made prior to 1 July 2026 will have late payment offsets apply.
- For example, under the current legislation, if an employer missed the SG due date (which currently operates on a quarterly basis) and the SG payment was made after the due date but prior to the ATO raising an SG Charge assessment, the employer would be able to lodge a Superannuation Guarantee Charge statement.
- The employer could opt to use a late payment offset to offset the shortfall and nominal interest components of the SGC and put the payment towards future super payments (noting that this is limited to a period of no more than 12 months from the beginning of the quarter).
- This is dependent on the employer meeting the following conditions:
- Payment is made to the employee’s super fund.
- Payment is made prior to the date the original SGC assessment was made.
- Lodgement of late payment offset election in the SGC statement within four years of the original SGC assessment date.
- Due to the implementation of Payday Super, late payment offsets on SG contributions will no longer be available from 1 July 2026.
- Employers must pay SG contributions within seven business days of each payday.
- For example, under the current legislation, if an employer missed the SG due date (which currently operates on a quarterly basis) and the SG payment was made after the due date but prior to the ATO raising an SG Charge assessment, the employer would be able to lodge a Superannuation Guarantee Charge statement.
- Paying late SG payments prior to an ATO SG Charge assessment will not reduce the SG charge.
ATO compliance approach will involve risk categorisation
The proposed start date of 1 July 2026 has remained unchanged, however for the period 1 July 2026 – 30 June 2027, the ATO have advised in their recently released Practical Compliance Guideline, Payday Super – first year ATO compliance approach (PCG 2025/D5) that a ‘grace period’ will be provided for some employers, dependent on circumstances and associated risk classification.
For example, the ATO have cited that between 1 July 2026 and 30 June 2027, the ATO will not have cause to review actions of employers classified as ‘low risk’. However, from 1 July 2027, ‘low risk’ employers who have individual base SG shortfalls for one or more employees for Qualifying Earnings (QE) Days on or after that date may be subject to compliance action in relation to those QE Days.
Payday Super risk categories
The ATO has categorised employers into ‘risk zones,' spanning low, medium, and high risk. The ATO intend to apply compliance resources based on these risk levels, prioritising the highest risk categories first. These are employers who have not paid the minimum amount of SG contributions for their employees. Essentially, employers with an individual final SG shortfall greater than nil for one or more employees on the QE Day.
The ATO has provided guidance, as per Tables 1 & 2 of PCG 2025/D5, respectively, regarding the risk classification of employers and the associated requirements for each risk zone, which are outlined below
Risk zone | Unpaid superannuation query and proactive case selection |
Low | We will not have cause to review the employer’s actions. |
Medium | Compliance resources may be applied to investigate whether the employer has an SG shortfall for one or more QE days. Medium-risk arrangements will be given lower priority than arrangements that are rated high risk. |
High | Compliance resources will be applied to investigate whether the employer has an SG shortfall for one or more QE days. High-risk arrangements will be given the highest priority resourcing. |
Risk zone | Requirements |
Low | An employer will be in the low-risk zone where all of the following have been met: The employer attempted to ensure that all of their individual base SG shortfalls in relation to their employees were nil for the QE day, by making on-time contributions equal to or exceeding the individual SG amount. Some or all of the eligible contributions were not received by the relevant fund (and allocable for the benefit of the employee) on time. These eligible contributions are received by the relevant funds and allocable for the benefit of the employees as soon as reasonably practicable, resulting in the employer having individual final SG shortfalls of nil for all employees for the QE day at that time. |
Medium | An employer will be in the medium-risk zone where the employer does not meet the criteria to be in the low-risk zone, but the individual final SG shortfalls for all their employees are nil by 28 days after the end of the quarter in which the qualifying earnings were paid. |
High | An employer will be in the high-risk zone if they have one or more individual final SG shortfalls greater than nil for their employees by 28 days after the end of the quarter in which the qualifying earnings were paid. |
Are you ready for Payday Super?
Key areas to consider:
Given the upcoming changes, from 1 July 2026, it is a good time for employers to consider their payroll environment and assess if their payroll systems are set up to ensure compliance with SG contribution amounts. Some things to consider when assessing your payroll systems include:
- Changes required to payroll systems: Whether any system configuration updates are required, and if an employer will need to consult with their payroll software provider to gain an understanding of when system updates will be rolled out. This should also include performing any payroll system testing ahead of the Payday Super effective date of 1 July 2026, in order to assess the readiness of systems.
- Continuous review of payroll outcomes: Payroll systems should not be ‘set and forget’ and should be reviewed periodically to aid in the correct and timely payment of employee entitlements and associated compliance with regulatory requirements. Considering the significant incentives associated with active voluntary disclosures under Payday Super, regular and continuous reviews should become normal process.
- Internal controls: Consider whether internal controls are adequate, alongside existing policies, procedures and frameworks. Pay attention to any updates required to these respective materials as a result of Payday Super.
- ATO reporting requirements: The ATO has outlined that employers are required to start reporting on super liability and QE amounts as new STP reporting fields from 1 July 2026.
- The ATO defines qualifying earnings as the earnings used to calculate SG contributions, as well as SG Charge. Qualifying earnings are generally aligned with the concept of Ordinary Time Earnings (OTE).
- Configurations: Wage code configuration, and any required updates as a result of Payday Super, to ensure completeness and accuracy across superannuation and STP reporting.
- Key personnel involved in payroll/finance will need to be trained on the reporting requirement updates associated with Payday Super.
- Ensure employees are aware of the changes to SG requirements, including updates to the frequency of employer SG contributions. These comms should include the changes to the Maximum Contribution Base (MCB) methodology resulting from Payday Super (see below).
MCB periods will shift from quarterly to being calculated on an annual basis with the commencement of Payday Super. Employers need to consider the required changes to system calculations/SG contribution calculation methodology based on annual frequency to ensure accurate MCB calculations.
The Payday Super reforms also bring an end to the use of the SBSCH. From 1 July 2026, this facility will no longer be available, and employers must instead use payroll-integrated solutions or alternative clearing houses to distribute contributions.
Employers normally have until 28 July to pay SG for payments up to 30 June under the current framework. However, with SBSCH closing on 30 June, employers must ensure these payments are managed accordingly.
Full summary of Payday Super changes
Refer to the below table for a summary of changes from existing Super obligation to Payday Super obligations:
Element | Existing Super obligations | Payday Super obligations (effective as at 1 July 2026) |
Accrual and calculation of SG shortfalls | ||
| OTE vs QE | SG contributions are currently based on the concept of Ordinary Time Earnings (OTE), which comprises the following:
OTE excludes the following:
| Qualifying earnings (QE) refers to the base earnings used to calculate SG contributions, comprising the following:
|
SG Charge |
|
|
Contribution treatment |
|
|
Maximum Contributions Base (MCB) |
|
|
Calculating SG charge | ||
SG Charge components | An employer’s total SG shortfall for the relevant quarter comprises:
| An employer’s total SG shortfall for the relevant QE day comprises:
|
Interest component | Nominal interest calculated using prescribed rate (10% per annum), applied from start of quarter to SG charge due date. | Notional earnings are calculated using the general interest charge rate, compounded daily until eligible contribution or assessment. |
Administration component | Administrative component of $20 per employee, per quarter for employees with an SG shortfall for that quarter. | Initial administrative uplift amount based on a percentage (60%) of the sum of the individual final SG shortfalls and individual notional earnings components for a QE day. |
Penalties for unpaid SG charge |
| If unpaid 28 days after assessment: • Commissioner issues notice • Penalty = 25% of unpaid amount, or 50% if previously penalised in last 24 months • Penalty can not be remitted and does not accrue GIC |
Administration | ||
Statement lodgement |
|
|
Assessment process | Lodgement of SG Statement is treated as an assessment. If an SG statement is not lodged for a particular quarter, the Commissioner may make a default assessment if an employer is deemed as liable for an SG charge for that quarter. | The Commissioner may assess an employer’s SG shortfall and the amount of SG charge payable for a QE day. The Commissioner may make this assessment:
|
What preparations can be made?
Employers should consider the below preparation checklist:
Superannuation compliance testing
- Following the introduction of STP Phase 2, the ATO collect real-time information and can determine if employers are paying SG on OTE wage codes. Therefore, as a first step, we recommend that employers conduct a wage code review to ensure SG is calculated on all applicable payments, and that the STP reporting codes are also aligned.
- For a much higher level of assurance, following the review of wage codes we recommend conducting testing, at least at a sample level, of transactional data to test that the system is working as the business expects.
Onboarding processes
- Employers will need to evaluate if the internal processes and controls will be sufficient for the updated reporting requirements. We can provide best practice guidance on what should be implemented to ensure that the required steps are taken when new employees join your business (e.g. requesting stapled Superannuation Fund details).
Payroll timing
- Processing time is more critical than ever; employers should assess whether the changes (including the increase in payment frequencies) will impact payroll’s ability to process the SG contributions on time. As part of this, employers should consider that automations can be made to reporting, and if a clearinghouse can be integrated with the payroll system to speed up processes.
- Review the suitability of current employee pay cycles (e.g., weekly, fortnightly or monthly) for future needs.
- Plan future cash flows to accommodate the requirement of paying SG immediately after a pay run instead of quarterly.
For more information
Should you wish to learn more about how RSM’s SG testing is helping employers prepare for Payday Super, or if you have any other questions, please contact your local RSM Global Employer Services representative:
- Rick Kimberley – National Leader - [email protected]
- Gina Nedeljkovic – WA Leader - [email protected]
- Peter de Sousa – VIC Leader - [email protected]
- Jason Dutt – NSW - [email protected]
- Niamh Oakley – WA - [email protected]
