The Federal Government’s long-awaited Payday Super reforms became official on November 4, following the Treasury Laws Amendment (Payday Superannuation) Bill 2025 passing both houses. This change also addresses one of the ATO’s key priorities outlined in its 2025-26 corporate plan released in August.
What is Payday Super?
Under the new legislation, employers will be required to make superannuation guarantee (SG) payments simultaneously with employee salaries and wages. Penalties will apply to employers who fail to make super contributions within seven business days of wage or salary payments.
This measure was first announced by the Federal Government in 2023 with strong support from the superannuation industry. The reform is intended to increase compound interest accrued on employee super balances, while making it harder for employers to withhold or delay super contributions.
How will this impact businesses?
The implementation of Payday Super will likely increase the administrative burden on employers.
“The changes are expected to result in some transitional and some ongoing compliance costs for employers, particularly those employers that do not currently make SG contributions at the same time as they pay qualifying earnings,” states the explanatory memorandum attached to the Bill.
Digital service providers and payroll automation software will need to update functionality to include SG contributions, which will likely come at some cost to the consumer. Superannuation funds will also need to accommodate an increase in contribution volume.
For smaller businesses struggling to maintain cash flow, this legislation presents further challenges. Failure to make super contributions within the seven-business-day window will result in a superannuation guarantee charge and further compounding penalties for non-compliance. This means that debt will quickly pile up for employers who struggle to keep up with their contributions, making them a priority for cash flow.
When does Payday Super come into effect?
The planned implementation date for Payday Super is July 1, 2026 giving employers just over six months to prepare. This decision has drawn criticism from business organisations such as the Council of Small Business Organisations Australia, with Chair Mathew Addison calling for a realistic target.
“We support the intent of Payday Super, but good policy needs to work in practice,” Addison said.
“Small businesses want to do the right thing, but they need time to prepare, support to manage the compliance costs, and fair treatment when system failures occur that are outside their control.”
Key takeaways
While the Payday Super legislation represents a positive step forward for employees and the super industry, the short runway presents challenges to employers and small businesses.
SMEs should urgently prepare for Payday Super, prioritising careful cash flow management, implementing updated policies and processes and updating systems and software to ensure compliance.
If your business is concerned about the upcoming changes, Optima Partners can help. Our team of experienced accountants can provide timely advice and support your business with a tailor-made strategy. Contact us today to find the best solution for your business.
