On 18 September, the Federal Government announced that payday super will be compulsory from 1 July 2026.
Currently, superannuation guarantee (SG) contributions can be paid once a quarter. However, the new legislation aligns SG contributions with an employee’s pay cycle – meaning that each time you pay your employees their wages, you’ll need to pay their SG contributions too.
Employers must ensure SG contributions are received by their employees’ superannuation fund within seven calendar days of payday. Non-compliance may result in penalties under the updated SG charge framework. An SG charge will apply to any late or missed payments and the longer the delay, the bigger the penalties.
Legislative updates and guidance will be provided by the ATO and other relevant authorities in the lead up to the implementation date, and we will also keep you informed.
Why the change?
While most employers do the right thing and pay their employees’ SG as required, some employers don’t, and this reform is designed to address the longstanding issue of unpaid and underpaid super.
According to data from the ATO, unpaid super costs 2.8 million workers approximately $5.1 billion a year. Over nine years, it was estimated that Australians did not receive $41.6 billion in unpaid super¹.
The Super Members Council of Australia’s recent report Fixing unpaid super: Making super fairer for workers and employers alike found that the average affected worker was not paid $1,800 in super in a year, which would amount to over $30,000 less in retirement savings. It’s most likely to be those in insecure work, lower-income earners, migrants, women and younger workers affected².
While these changes are aimed at supporting employees to build their retirement savings faster, there are some benefits for employers too. For example, syncing super with payroll could help reduce your risk of missing deadlines and super liabilities, and simplify payroll management in the long run.
We’ll keep you informed on the details of payday super as the implementation gets closer. You can also find more information on the ATO website: www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/payday-superannuation.
¹ Super Members Council (2024, August). “Fixing unpaid super: Making super fairer for workers and employers alike”. https://smcaustralia.com/app/uploads/2024/08/Fixing-unpaid-super-SMC-Report-August-2024.pdf.
² As above.
