Payday Super: Implications for employers & payroll operations
29/10/2025
New Payday Super legislation will mean employers now have about eight months to prepare their systems and processes. The requirements are expected to intensify Australian Taxation Office (ATO) scrutiny and increase administrative workloads for payroll.
After months of anticipation, on 9 October 2025, the Australian Treasury introduced legislation to Parliament to implement the Government’s Payday Superannuation proposal. This marks a significant change to how superannuation guarantee (SG) obligations are determined, paid, and reported. As highlighted in our previous article, ‘Payday Super – Consultation crucial to avoid an administrative and penalty minefield’, these changes are expected to have broad operational impacts for employers and payroll teams.
In less than eight months, from 1 July 2026, employers will be required to pay SG contributions within seven business days of each payday, replacing the current quarterly cycle.
The reform aims to reduce the estimated $5.2bn in unpaid superannuation and improve retirement outcomes for Australian workers. While the policy has been broadly welcomed, it introduces new compliance obligations and operational challenges that may place additional pressure on employers and their payroll teams.
Key developments
Earlier this year, the Australian government released draft legislation outlining the proposed shift to payday-based SG contributions. It required employers to pay contributions within seven calendar days of each payday and introduced a redesigned Superannuation Guarantee Charge (SGC) framework. This included the following:
- a re-allocation of super contributions to the earliest payday if there are shortfalls
- daily compounding variable interest
- an annual maximum contributions base
- alignment of superannuable earnings for calculation of the charge
- greater choice loadings
- new administrative and late payment penalties.
The updated bills include several refinements, most notably, the timeframe for SG payments has shifted from calendar days to business days, aligning time requirements with typical business practices. Employers now have 20 business days to make contributions to a new employee’s fund or when contributing to a new fund for an existing employee.
Concessional FY26 compliance approach
The ATO has released Draft Practical Compliance Guideline PCG 2025/D5 outlining the compliance approach for the first year of implementation. It sets out a risk-based framework that categorises employers as low, medium, or high risk based on their payment behaviour.
While it offers welcome relief for employers that make good attempts to adhere to the new rules, it does confirm that there is no intended amnesty for SGC under the new rules. It also signals a likely change to the ATO’s enforcement strategy from reactive to a targeted risk-based approach. This is made possible through a richer dataset from superannuation funds and payroll reporting.
To facilitate a more pro-active compliance approach, the ATO will need to significantly increase its internal compliance and data resources. It will also need to develop sophisticated data models to assess employer compliance, account for any legitimate updates to employer information, and calculate the SGC when non-compliance is identified. These requirements could intensify early implementation challenges and place significant pressure on both existing and new ATO resources under the updated framework.
Preparing for the change
This is one of the most significant payroll changes since Single Touch Payroll, impacting not just the frequency of superannuation payments but also multiple operational systems, processes, and the ATO’s compliance approach.
Employers have eight months to consider a range of matters, which may include the following:
| Systems/Processes | Examples |
|---|---|
| Payroll system | • Implementation of updates by software providers • Updates to payroll configuration for Single Touch Payroll changes, including categorising wages codes for “qualifying earnings” • Configuration for actual superannuation obligations (if different) • Address complexities arising from the shift to an annual maximum contributions base, such as handling non-superannuable bonuses for high earners |
| Employee onboarding processes and choice obligations | • Ensuring compliance with choice obligations • Shorter timelines may require shorter more efficient processes (e.g. making superannuation stapling processes more efficient due to shorter timeframe) |
| Superannuation payment and reporting/clearing house processes | • Shorter timelines may require shorter more efficient processes (including managing routine issues with change in superannuation funds and clearing house reporting) • Navigating any complexity merging off-cycle pay run superannuation obligations with normal cycle |
| Payroll system wage code setup processes | • May need to be updated for any additional configuration fields |
| Processes for monitoring whether shortfalls have occurred and dealing with shortfalls/late payments | • Increased transparency and focus from the ATO as well as more frequent tight deadlines are likely to result in most employers having to deal with shortfalls • Given the increase in frequency for many employers, setting up processes to track when shortfalls occur and whether they have been dealt with • Setting up methodologies and processes for making and calculating voluntary disclosures of shortfalls to the ATO |
The ATO’s compliance approach has historically been reactive and not data driven (i.e. relatively manual) with SGC disclosures largely being voluntary or due to employee complaints. This is reflected in internal testing programs run by employers as well. For example, most testing programs stop at payroll system outcomes and do not test contributions at the fund level or choice of fund obligations. As a result, employers may find that current processes would not stand up to the requirements under the new regime.
The new rules also similarly require disclosures by employers where shortfalls have occurred. The new charge calculations are complicated, and without ATO tools, systematic shortfalls may be beyond the ability of most employers to calculate broadly.
There is the potential for significant stress on payroll teams as they grapple with implementing payroll system updates/changes in a short timeframe, manage more frequent superannuation processing, and adapt to new processes/legislative rules.
This underscores the importance of early preparation and robust internal controls to mitigate compliance risks under the new requirements.
How SW can help
Our team has supported some of Australia’s largest superannuation rectification programs, giving us deep insight into the complexities of superannuation systems and compliance. Drawing on this experience, we recommend a proactive approach to the upcoming changes, including:
- comprehensive testing of payroll and superannuation systems to identify and address gaps
- mapping change requirements across people, systems, and processes
- supporting the implementation of necessary updates to ensure compliance
- providing training and resources (e.g. develop tools) to equip your teams for the new requirements
- assisting with ongoing compliance monitoring and reporting.
Early engagement will help your organisation minimise compliance risks, reduce administrative burden, and ensure a smooth transition to the new payday superannuation requirements.
Our specialists are ready to work with you to develop a tailored implementation plan that ensures your systems, people, and processes are prepared well ahead of 1 July 2026. Beyond implementation, SW can continue to support your organisation with compliance monitoring, process reviews, and strategic advice as the ATO’s data-driven compliance framework evolves. Preparing early not only reduces risk but also positions your business to respond efficiently to future payroll and superannuation reforms.
