Payday Super legislation: Payroll tax implications for employers

From 1 July 2026, the national Payday Super reforms will fundamentally change when employers are required to pay superannuation guarantee (SG) contributions. Although the measures are focused on improving SG compliance and employee outcomes, it also has important flow on implications for payroll tax, particularly in relation to timing, reporting and cash flow management.

Although Payday Super does not change the payroll tax base, employers should be prepared for the practical impacts of moving from quarterly to payday aligned super payments.

What is changing under Payday Super?

Under the current framework, employers can pay SG contributions quarterly provided they are received by the relevant super fund by the statutory due dates. From 1 July 2026, this flexibility will be removed. Under Payday Super:

• SG contributions must be paid on each payday, alongside salary and wages
• Contributions must generally be received by the employee’s super fund within seven business days of payday
• SG will be calculated on Qualifying Earnings, with enhanced real-time reporting through Single Touch Payroll (STP)
• The ATO will have significantly earlier visibility on late or unpaid super.

These changes are now legislated and will apply to all employers, regardless of size or industry.

Key payroll tax implications for employers

The introduction of Payday Super from 1 July 2026 brings several notable payroll tax considerations that employers need to understand and address.

Earlier and more frequent payroll tax liabilities

With SG now payable on every payday:

• Superannuation costs will arise weekly, fortnightly or monthly, depending on payroll cycles
• Payroll tax liabilities linked to super will be payable more frequently
• Employers that previously accrued super quarterly will lose the flexibility with timing.

While the total annual payroll tax liability is unaffected, the shift may materially affect short-term cash flow, particularly for labour intensive businesses or those with weekly payrolls.

Increased importance of payroll period alignment

Payroll tax is generally assessed on wages paid or payable in a return period. Under Payday Super:

• Super must be correctly attributed to the same payroll period as the related wages
• Any mismatch between wage payments and super payments increases compliance risk
• Late super payments may still result in payroll tax liability, even where the employer is liable to pay a Superannuation Guarantee Charge (SGC). Super remains taxable for payroll tax purposes even where it is paid late or via the SGC mechanism.

Greater compliance visibility

Payday Super is supported by enhanced STP reporting and data matching between the ATO and superannuation funds. While payroll tax is administered at the state level, employers should expect:

• Increased scrutiny of payroll data consistency
• Easier identification of timing mismatches between wages and super
• Flow‑on audit risk where payroll systems are not configured correctly.

Payday Super and State-based impacts

State revenue authorities in Victoria, Queensland and Tasmania have recently updated their payroll tax guidance to reflect changes to the Commonwealth Paid Parental Leave (PPL) scheme, including the extension of entitlements and the introduction of Commonwealth funded superannuation contributions from 1 July 2025. While the underlying payroll tax treatment remains largely unchanged, the updated rulings provide important clarification for employers administering parental leave payments through payroll.

Victoria

In Victoria, the position remains clear and unchanged:

• PPL funded by the Commonwealth Government is not subject to payroll tax, even where payments are processed through an employer’s payroll
• Separately, employer‑funded parental leave may be exempt from payroll tax for up to 14 weeks per child, provided it qualifies as primary or secondary caregiver leave and meets the Victorian exemption criteria.

Queensland

Queensland has recently updated its payroll tax rulings to reflect changes to the Commonwealth Paid Parental Leave scheme, including the introduction of Commonwealth funded superannuation. The Queensland Revenue Office has confirmed that:

• Both Commonwealth funded parental leave payments and the associated Commonwealth paid super are not taxable for payroll tax purposes
• Where an employer provides its own paid parental leave, the existing Queensland parental leave exemption (generally capped at 14 weeks) continues to apply, and any voluntary employer funded super contributions remain taxable.

Tasmania

Tasmania has aligned its guidance with other jurisdictions by confirming that:

• Commonwealth funded Paid Parental Leave is not liable for payroll tax, even when paid through employers
• Tasmania has also clarified that superannuation contributions paid by the ATO on Commonwealth parental leave are not taxable wages. Employers should note, however, that any voluntary super contributions they choose to make during parental leave periods will remain subject to payroll tax.

How BDO can help

BDO’s employment tax specialists can guide you through the recent payroll tax changes affecting parental leave and superannuation in Victoria, Queensland and Tasmania. Our team will help ensure your payroll coding and documentation are accurate and compliant, minimising tax risk and supporting you in meeting state-based exemption requirements. We can review your employer-funded parental leave and super arrangements to confirm eligibility and identify any areas requiring attention.

If you would like tailored advice or have questions about employment taxes, please reach out to a BDO employment tax specialist.