Superannuation is an important part of employees’ retirement plans, but ensuring contributions are paid on time has often been a complex and sometimes delayed affair. In response to these challenges, the Australian Government has announced significant changes affecting how and when employers pay superannuation contributions.
Starting from 1 July 2026, employers will be required to pay their employees’ superannuation at the same time as their salary and wages. This move, known as Payday Superannuation, aims to streamline the process and make it easier for employees to receive their superannuation contributions on time. In this blog, we’ll walk you through what these changes mean for both employers and employees and how you can prepare for the transition.
Payday Superannuation is a reform set to take effect from 1 July 2026, which mandates that employers must pay superannuation guarantee (SG) contributions at the same time they pay employee wages. This means no more delays between when employees are paid and when their super is contributed to their super funds.
As of now, employers are required to pay superannuation at least quarterly, and there’s no requirement to pay it with the employee’s salary and wages. However, this new reform will align the timing of super contributions with employees’ payday, ensuring they receive their super on time, every time.
The introduction of payday superannuation is aimed at addressing concerns about delayed super contributions. The current quarterly payment system can lead to delays, with employees sometimes waiting months for their superannuation payments to reach their accounts.
By requiring employers to pay super at the same time as salaries, the government aims to ensure that employees are not left waiting for their retirement savings. This change will also simplify the process for employers, who will no longer have to track quarterly deadlines or deal with complex payment systems.
1. Paying Super at the Same Time as Salary and Wages: From 1 July 2026, employers will be required to pay superannuation contributions alongside salary and wages. Each time an employer pays ordinary time earnings (OTE) to an employee, there will be a new “due date” for contributions. Employers will need to ensure that the superannuation payments are made to the employee’s super fund within 7 days of payday.
2. Super Guarantee Charge (SGC): If an employer fails to make the superannuation contributions on time, they will be liable for the Super Guarantee Charge (SGC). The SGC is a penalty imposed on employers for late payments, and it includes:
Employers will also face interest and further penalties if the SGC is not paid in full by the due date. Fortunately, the SGC will be tax-deductible, which means the tax implications of paying super on time will be consistent with the rest of a business’s financial obligations.
3. Retirement of the Small Business Superannuation Clearing House (SBSCH): The SBSCH, which currently helps small businesses manage their superannuation payments, will be decommissioned by 1 July 2026. In its place, businesses will be encouraged to use more modern and efficient payroll software solutions. These new systems will make it easier for employers to pay super contributions on time and accurately.
4. Updated SuperStream Standards: To improve the flow of superannuation payments, the government is updating the SuperStream system. Super funds will now have just 3 business days to allocate or return contributions, down from the previous 20 business days. This change will ensure faster processing and fewer delays in the superannuation system.
5. STP Reporting Changes: Employers will need to report both the employee’s ordinary time earnings and total super liability through Single Touch Payroll (STP). This means that superannuation contributions will be reported directly to the Australian Taxation Office (ATO) in real-time, ensuring the super is tracked and identified correctly.
For employers, these changes will require significant adjustments to payroll systems and processes. Here’s how you can prepare:
1. Adopt New Payroll Software: With the SBSCH being retired, it will be important for employers, especially small businesses, to switch to more advanced payroll software. These systems will integrate with SuperStream and ensure super is paid on time.
2. Plan for Payment on Payday: Employers will need to adjust their payroll schedules to ensure that superannuation contributions are paid every time an employee is paid. This change may affect cash flow and will require businesses to review their payroll processes.
3. Review Reporting Obligations: Employers will also need to ensure that their reporting under Single Touch Payroll (STP) includes the necessary details about superannuation contributions. This may involve working with payroll providers to ensure accurate reporting.
4. Keep Track of Due Dates: Each payday will bring a new “due date” for super contributions. Employers will need to make sure that contributions are received by the superannuation fund within 7 days of payday, or they may face penalties.
5. Budget for Potential Costs: Failure to meet the new obligations may result in financial penalties and additional costs. Employers should factor these potential costs into their budgets and ensure they comply with the new rules to avoid unnecessary charges.
Payday superannuation will benefit employees as they will no longer have to wait months for super contributions to be deposited into their accounts. Here’s how employees will benefit:
1. Faster Super Payments: Employees will receive their super contributions on the same day as their pay, ensuring they have timely access to their retirement savings.
2. Clearer Records: Employees will be able to track their superannuation contributions more easily since they will be paid with each salary or wage payment, making it simpler to monitor their retirement savings.
3. More Consistent Contributions: Employees can expect more consistent super contributions, which may lead to better retirement outcomes over time.
The move to payday superannuation is a positive step towards improving the superannuation system for both employers and employees. While there will be some changes and new responsibilities for employers, the ultimate goal is to make superannuation contributions more timely, accurate, and transparent.
Employers should start preparing now by adopting modern payroll software, ensuring they understand their reporting obligations under STP, and planning for the transition. Employees can look forward to more timely and consistent super contributions, making it easier to save for the future.
The transition to payday superannuation may seem challenging at first, but with proper planning and the right tools, businesses can navigate these changes smoothly and avoid unnecessary penalties.
If you have any questions or need assistance in understanding how payday superannuation will impact your business, don’t hesitate to reach out to us at The Hrkac Group. We’re here to help you make sense of the new regulations and ensure that you stay compliant with the upcoming changes. Contact us today via our online booking form or call our Geelong office on (03) 5224 2366 to schedule a consultation and take the next step towards a healthier financial future.
