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Our tax team have been following the Payday Super legislation since March 2025, when the Government released its long-awaited draft legislation to reform the Payday Super regime.
30 April, 2026
With Payday Super almost here, employers must be ready for new rules, tighter contribution timeframes and increased compliance risk.
Our global expatriate and employment tax team unpack the ATO’s latest draft guidance, explaining what’s changing and how employers should act now to avoid penalties.
19 November, 2025
As the countdown to superannuation reforms begins, our global expatriate and employment tax team are here to break down what’s changing and how employers should already be preparing to avoid strict penalties.
13 November, 2025
The Australian Government has passed legislation introducing Payday Super, a reform that will fundamentally change how employers meet their superannuation guarantee (SG) obligations. From 1 July 2026, super contributions will need to be paid within seven business days from the date of salary and wage payment, rather than quarterly. This shift is designed to close the $5 billion SG gap and ensure employees receive their entitlements promptly. Read more about the changes below, and how you can prepare.
Payday Super is more than a compliance update - it’s a cultural shift in how employers manage employee entitlements. By acting early, businesses can avoid penalties, reduce administrative stress, and maintain trust with their workforce. If you need support in complying with the new legislation and preparing before 1 July 2026, please contact our employment tax experts for support, or find out more about our team and services here.
16 October, 2025
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 the 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.
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.
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.
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.
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:
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
17 March, 2025
On 14 March, the Government released its long-awaited draft legislation to reform the Payday Super regime, Treasury Laws Amendment Bill 2025: SG reforms to address unpaid super. The proposed Payday Super legislation introduces significant changes that will impact how superannuation contributions are managed by employers, with employers required from 1 July 2026 to pay their employees' super at the same time as their salary and wages.
The important proposed policy changes are as follows:
The legislation maintains the existing definition of when superannuation contributions are considered paid. Contributions are only deemed paid when they reach the employee's super fund, except for instances using the Small Business Superannuation Clearing House (SBSCH). This could potentially expose employers to liabilities beyond their control, even if contributions are made promptly after payday.
Under the new legislation, employers are required to process super contributions into the employee’s super fund within seven calendar days of payday. This remains unchanged from the framework released previously, with no differentiation between business days and calendar days.
Effective from 1 July 2026, the Small Business Superannuation Clearing House (SBSCH) will cease operations. Small businesses will no longer have the option to treat super contributions as paid upon processing by the clearing house, aligning them with other employers who must ensure timely payments directly to super funds.
Regardless of payroll frequency—weekly, fortnightly, or monthly—the new regime applies uniformly. Weekly payrolls will see a notable increase in the frequency of super contributions, requiring approximately 13 payments per quarter instead of the previous quarterly payment schedule.
The proposed legislation introduces a revised penalty regime where repeat non-compliance will attract penalties up to 50 per cent, compared to the current maximum of 200 per cent which can be remitted by the ATO. This stricter approach aims to deter ongoing breaches, although innocent offenders may also face penalties, particularly if they have previously been liable within the last 24 months.
A positive change includes shifting the maximum contribution base from quarterly to annual calculations. This adjustment aligns with the annual concessional contributions cap for employees, potentially simplifying compliance for employers and reducing inadvertent breaches.
The legislation proposes replacing the current 10 per cent nominal interest rate with the ATO's General Interest Charge (GIC) rate, currently at 11.42 per cent for March 2025. Additionally, the administration component will no longer be a fixed $20 per employee per quarter but will be subject to a 60 per cent uplift based on the total shortfall and interest, with discretionary reductions for voluntary disclosures.
Under the new system, SG statements will be replaced with voluntary disclosure statements, streamlining the compliance process for employers while allowing for potential reductions in administrative penalties.
A significant change includes making the Super Guarantee (SG) charge tax-deductible, enhancing the tax outcomes for employers. However, penalties will remain non-deductible under the proposed legislation.
These proposed changes signify a pivotal shift in how employers manage superannuation obligations. With the potential commencement date approximately 15 months away and amidst ongoing legislative developments, proactive preparation is crucial.
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