New payday super rules: preparing your business for the July 1 shift
Major superannuation reforms come into effect on July 1, 2026, marking a significant shift for WA businesses.
Business Law WA unpacks the changes and provides important early guidance on what employers need to prepare for now.
What is happening to superannuation on July 1, 2026, and why is it significant?
From July 1, 2026 Australia will see the biggest change to the superannuation regime in Australia in more than 30 years.
This reform will impact how employers calculate pay and report their employees’ super contributions.
The main motivation behind this initiative is to reduce the ‘super guarantee gap’ – the estimated billions of dollars of unpaid or late superannuation each year. By tightening compliance and reporting requirements, the Federal Government hopes to ensure employees receive their full superannuation entitlements on time.
What is the legislative framework?
Two key bills were introduced in Federal Parliament in October 2025:
- The Treasury Laws Amendment (Payday Superannuation) Bill 2025; and
- Superannuation Guarantee Charge Amendment Bill 2025.
These were granted Royal Assent in November 2025. The Treasury Laws Amendment (Payday Superannuation) Act 2025 (Cth) and Superannuation Guarantee Charge Amendment Act 2025 (Cth) set out the legislative framework for the new regime.
Who does it apply to?
These changes apply to ALL employers in Australia as well as any business that engages independent contractors (that are considered employees for superannuation purposes).
What are the key changes?
From July 1, 2026, employers must calculate super on an employee’s qualifying earnings (QE), rather than under the current earnings-base framework, and pay super at the same time as salary or wages are paid.
The contribution must be received by the employee’s super fund within seven business days (subject to limited exceptions, including for first contributions for new employees or to a new fund).
What are ‘qualifying earnings’?
From July 1, 2026, QE will be the earnings base used to calculate the super guarantee (SG) liability and any super guarantee charge (SGC) shortfall. Currently, employers calculate SG and SGC using different earnings bases. QE includes:
- Ordinary time earnings (OTE): amount earned for ordinary hours of work, including paid leave, allowances and bonuses
- All commissions paid to an employee
- Salary sacrifice amounts that would have been QE had they not been sacrificed to superannuation
- Amounts paid to workers who are treated as employees for SG purposes under the extended statutory definition, including certain contractors engaged wholly or principally for their labour
How is the SG amount calculated?
From July 1, 2026, the SG amount is calculated as 12% of an employee’s QE.
What are the reporting requirements for employers?
From July 1, 2026, employers must report QE and super liability through Single Touch Payroll (STP) in accordance with ATO requirements.
It is not mandatory to report payments made through STP to independent contractors paid mainly for their labour, even where they may be entitled to super under the extended definition of employee for SG purposes. However, if an employer does choose to report those workers through STP, the employer must report QE and super liability.
How will small businesses be assisted in the transition?
The ATO understands there is a very tight timeframe for businesses to be compliant under the new regime. To assist employers, it has released a practical guideline (PCG 2026/1) which sets out the ATO’s first-year compliance approach. The guideline will be in effect for one year from July 1, 2026.
What is the Small Business Superannuation Clearing House (SBSCH)?
The SBSCH is a free ATO online service that allows eligible small businesses to pay super contributions for multiple employees in one simple transaction.
As part of the Government’s Payday Super reforms, the SBSCH will close to all users from July 1, 2026.
Businesses that currently rely on SBSCH, will need to:
- Chose an alternative method for paying super; ideally one that integrates with your payroll software; and
- Ensure contributions are paid using a system that allows the employee’s super fund to receive them within the required Payday Super timeframe, including generally within seven business days after payday.
SGC from July 1, 2026
The Superannuation Guarantee Charge (SGC) applies when an employer does not pay the required super correctly or on time.
From July 1, 2026, the ATO will assess the updated SGC under the Payday Super rules, where non-compliance is identified, including through employer disclosure, employee notification or ATO compliance activity.
The updated framework is designed to ensure employees are compensated for delayed super, encourage prompt rectification, and impose more significant consequences on employers who repeatedly fail to comply.
What are the consequences for non-compliance?
From July 1, 2026, employers that do not pay SG on time under the Payday Super rules may be liable for the Superannuation Guarantee Charge (SGC).
The ATO will assess the charge, and further interest and penalties may apply if it remains unpaid. Because liability escalates the longer non-compliance continues, employers should ensure their systems can pay SG accurately and on time to the correct super fund.
If a business engages independent contractors who fall under the Superannuation Guarantee (Administration) Act 1992 (Cth) definition of an employee for super purposes, when should these contractors’ superannuation be paid?
Superannuation must be paid in accordance with the Payday Super rules from July 1, 2026.
In general, the contribution must be received by the contractor’s super fund within seven business days after the day the contractor is paid qualifying earnings. As a practical matter, this means super should usually be paid at the same time as each weekly, fortnightly or monthly payment.
If the contractor is paid quarterly, the contribution is generally due within seven business days after that quarterly payment. Limited exceptions apply, including for first contributions and certain out-of-cycle payments.
What can businesses do to prepare for July 1, 2026?
Business Law WA can advise you on how to meet your obligations under the new Super Payday regime or how the changes may impact your business. Please contact [email protected] or call 08 9365 7560 to discuss further.
In addition, businesses should:
- Identify each employee’s qualifying earnings which includes:
- Ordinary time earnings, including ordinary hours of work, certain types of paid leave, allowances and bonuses
- Commissions
- Salary sacrifice amounts that would qualify as qualified earnings had they not been sacrificed to superannuation
- Amounts paid to workers who are treated as employees for super guarantee purposes under the extended statutory definition, including certain contractors engaged wholly or principally for their labour
- Review and update payroll software ahead of time so it can correctly calculate SG on QE, process contributions each pay cycle, and identify failed or rejected payments.
- Provide training and professional development for payroll, finance and HR staff so they understand the new compliance obligations, payment deadlines and consequences of non-compliance.
- Map current payroll frequencies for staff (ie. weekly, fortnightly, monthly) and ensure super contributions are processed so they are received by the relevant super fund within the required timeframe.
- Put in place is a contingency plan for delays or rejections of contributions so errors can be resolved promptly.
- Familiarise themselves with the ATO’s 12-month compliance and consultation approach.
- Implement reconciliation controls at each pay cycle, to ensure super contributions have cleared correctly.
- Review cash flow and funding arrangements in advance, including with finance providers, if necessary, to manage the effect of more frequent super payments.
Business Law WA can advise you on how to meet your obligations under the new Super Payday regime or how the changes may impact your business. Contact [email protected] or call 08 9365 7560.
This article is authorised by Business Law WA, an incorporated legal practice and wholly owned subsidiary of CCIWA. The content of this article is general in nature and is not legal or professional advice and should not be relied upon as such.
