Super gets a shake-up: What the new Payday Super legislation means for employers
Super gets a shake-up: What the new Payday Super legislation means for employers
Following much anticipation in relation to the Payday Super regime, on 9 October 2025, two Bills were introduced into Parliament - the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and Superannuation Guarantee Charge Amendment Bill 2025.
On the same day the Australian Taxation Office (ATO) released a Draft Practical Compliance Guideline PCG 2025/D5 Payday Super - first year ATO compliance approach.
This follows Government’s long-awaited draft legislation that was released earlier this year.
Under the proposed Payday Super reforms, employers will be required to make Superannuation contributions on a ‘payday’ basis (within seven business days). This is a significant change from the current superannuation guarantee (SG) regime which operates on a quarterly basis. SG contributions will be required on Qualifying Earnings (QE), introduced as part of Payday Super, but which essentially aligns with Ordinary Time Earnings.
The Payday Super reforms are not yet law, but at time of writing the new requirements are set to commence on 1 July 2026.
Key changes to the draft legislation
The most significant change since the draft legislation on 14 March 2025 relates to the seven day compliance period. Originally proposed to be a seven calendar day period, this has been changed to a more reasonable seven business day period in the introduced legislation.
ATO Practical compliance guideline for the first year
The ATO has issued a practical compliance guideline (PCG 2025/D5) which sets out the first year ATO compliance approach for the period from 1 July 2026 to 30 June 2027. The PCG proposes three risk zones - low, medium and high.
As acknowledged in the PCG, there may be cases where an employer attempts to pay sufficient super contributions for their employees in line with Payday Super, but the payment reaches the employees' super fund late. The level of risk for these cases will depend on whether attempts are made to correct the error and how quickly the employer corrects the error. An employer who corrects the error as soon as is reasonably practicable will fall into a lower risk zone than an employer who does not.
The ATO will not have cause to apply compliance resources to employers in the low-risk zone.
For the medium-risk zone, the ATO may apply compliance resources, noting such matters will be given lower priority than high-risk employers. Per the guideline, employers who continue making the required superannuation contributions, but on a quarterly basis, may be classified as medium risk.
ATO investigations will be prioritised where an employer is in a high-risk zone, typically where an employer makes insufficient contributions after the due date.
The PCG is open for consultation - with comments due by 7 November 2025.
BDO Comments
The change under the proposed legislation from a seven-calendar day period to a seven-business day period is a helpful and welcome development. However, employers may still be at risk of non-compliance where issues that are beyond their control occur during the processing of the contributions by super clearing houses and employee super funds.
The ATO draft guideline issued for the first year of the Payday Super regime aids in this regard, however it lacks practical examples where delays arise that are beyond an employer’s control, for example, where delays in the processing of contributions occur. BDO intends on participating in the consultation process, as we continue to advocate for employers in this area.
Key action required by employers:
Now that the Bills have been introduced into Parliament, employers should be taking the necessary steps ahead of 1 July 2026 to prepare for the introduction of Payday Super. These steps include:
- Review of employee onboarding processes to ensure appropriate information is captured as part of the process to minimise the risk of rejected contributions
- Review of contractor onboarding and payment processes for any individuals captured by the extended definition of an ‘employee’ for SG purposes (noting that the Payday Super rules will have application to contractors)
- System updates with respect to the maximum contribution base, noting configuration changes will be required to revert from a quarterly assessment to an annual assessment for higher income earners
- Consider any payroll and system updates that may be required to comply with Single Touch Payroll requirements in respect to Payday Super requirements
- Review of system configurations to ensure that all wage codes are appropriately configured from a SG perspective
- Review agreements and current processes with applicable clearing house/s and consider current remittance frameworks.
How BDO can help
Payday Super represents a fundamental re-write of the statutory regime for SG contributions and brings with it an expectation that employers will implement strong governance over their SG processes. In addition, the ATO will have increased visibility of superannuation contributions and enhanced data-matching capability, enabling a much more proactive approach to identifying late or missing contributions (noting that the concessions in the draft PCG only apply for the first 12 months).
The introduction of Payday Super presents an opportunity for employers to proactively ‘get their house in order’ with respect to SG compliance and this can be used as part of broader wage compliance and governance processes by employers.
BDO can assist with a review of pay codes and their configuration to ensure that they are configured correctly in relation to the application of the new qualifying earnings concept under the proposed Payday Super regime.
In addition, we can provide payroll process reviews, and other assurance activities to assist in identifying any high-risk areas as well as providing opportunities for improvement.
If you have any questions regarding this article or would like more information on employment taxes, please contact a BDO employment tax specialist
