A practical guide for small business owners preparing for the biggest super change in decades
If you employ anyone in your business, this one is for you.
From 1 July 2026, the way employers pay superannuation is changing. Instead of paying super quarterly, you will need to pay it every time you pay your employees’ wages. This is called Payday Super, and it applies to every employer in Australia regardless of size. It is now law. The Treasury Laws Amendment (Payday Superannuation) Act 2025 has been passed by Parliament, and the Fair Work Ombudsman has confirmed that the changes take effect from 1 July.
Whether you pay your team weekly, fortnightly or monthly, the rules are the same. Super must now keep pace with wages.
This guide breaks down what is changing, what it means for your business, and the practical steps you can take right now to be ready.
What Is Actually Changing?
Right now, employers pay super quarterly. The deadlines fall on 28 October, 28 January, 28 April and 28 July each year. As long as super reaches the employee’s fund by those dates, you are compliant.
From 1 July 2026, that quarterly system ends. Instead, super must be paid every time you pay wages. If you pay your team weekly, super is weekly. If you pay fortnightly, super is fortnightly.
The contribution must be received by the employee’s super fund within 7 business days after payday. Not submitted. Received. That is an important distinction, because if there are errors, rejections or processing delays, submitting on day 7 may not leave enough time.
The amount of super you owe is not changing. It is still 12% of eligible earnings. What is changing is the timing, and that has real implications for cash flow and payroll systems.
👉 ATO overview of Payday Super
Qualifying Earnings: A New Way of Calculating Super
Along with the timing change, the way super is calculated is also shifting. Employers will move from calculating super based on Ordinary Time Earnings (OTE) to a new method called Qualifying Earnings (QE). For most businesses, the amount of super you owe will not change significantly. But the way it is reported and categorised in your payroll system will.
Qualifying earnings includes:
- Ordinary time earnings (same as before)
- All commissions
- Salary sacrifice contributions
- Payments to independent contractors who fall under the extended definition of employee
Each payday, you will also need to report both year-to-date qualifying earnings and super liability for each employee through Single Touch Payroll (STP) under a new “Q” label. Now is a good time to check that your payroll software supports QE reporting and that your pay codes are mapped correctly. If you use Xero or QuickBooks, check with your provider about their update timeline.
👉 ATO guide on qualifying earnings
The Small Business Super Clearing House Is Closing
If you currently use the ATO’s Small Business Superannuation Clearing House (SBSCH) to process super payments, this is urgent.
The SBSCH is closing permanently on 1 July 2026. From 11:59pm AEST on 30 June, you will no longer be able to log in, submit payment instructions, or view any records. There will be no read-only access after that date.
You need to do two things before 30 June:
- Download all your employee payment transactions and employee details now. You may need them for audits, employee queries, or record keeping requirements down the track.
- Find an alternative provider. The good news is that most employers who currently use the SBSCH already have super payment functionality built into their existing payroll software. Check this first before looking at external clearing houses.
Do not leave this until late June. Give yourself time to test the new process and make sure payments are reaching funds within the 7 business day timeframe.
👉 ATO guide on transitioning from the SBSCH
Common Myths About Payday Super
There is a lot of misinformation floating around about Payday Super. The ATO has addressed several of the most common myths, and it is worth getting the facts straight.
“I should wait until 1 July to start doing anything.” The ATO has been clear on this one. Do not wait. Review your payroll system now, check with your software provider, and start the transition early. Up to 45% of employers are already paying super more frequently than quarterly, so for many businesses this is not as big a shift as it sounds.
“I can change my pay frequency to reduce the number of super payments.” That is not how it works. The frequency of when you pay your employees is set by the employment contract, award, or enterprise agreement. Payday Super changes when super must be paid, not how often employees are paid.
“A payment counts once I submit it.” No. A payment only counts once it is received by the employee’s super fund. Submitting on day 7 may not leave enough time if there are errors or rejections. Build in a buffer.
👉 ATO fact sheet: Busting Payday Super myths
The ATO’s First-Year Compliance Approach
The ATO has released its compliance approach for the first year of Payday Super under PCG 2026/1. It uses a risk-based model to categorise employers into three zones:
Low risk: Employers who pay contributions on time, act transparently, and fix any issues quickly. If some contributions are missed but corrected as soon as reasonably practicable, the ATO will generally not investigate.
Medium risk: Employers making genuine efforts to comply but experiencing occasional delays or inconsistencies. The ATO may look into this group but will prioritise higher-risk employers first.
High risk: Employers failing to make sufficient contributions or miscalculating qualifying earnings. Continuing to pay super quarterly after 1 July will place you in a higher risk category.
The key message is that if you make a genuine effort to comply and fix mistakes quickly, you are unlikely to be the focus of compliance action in year one. But from 1 July 2027, the grace period ends and the full rules apply.
👉 ATO Payday Super compliance information
What Happens If You Keep Paying Quarterly?
This is one of the most common questions I am getting right now. The short answer is, the ATO will notice.
Employers who continue paying super quarterly after 1 July will be classified as medium to high risk under the ATO’s compliance framework. If super is not received by the employee’s fund within 7 business days of payday, a super guarantee shortfall is triggered. That shortfall can lead to:
- The missed super amount based on qualifying earnings
- An interest component that increases the longer it is unpaid
- An administration fee per affected employee
- Potential penalties of 25% to 50% of the super guarantee charge if statements are late or incorrect
The super guarantee charge is not deductible, so it is a real cost to the business with no tax offset.
What You Should Do Right Now
You do not need to wait until 1 July to start preparing. Here is a practical checklist to work through over the coming weeks:
- Check with your payroll software provider (Xero, QuickBooks, MYOB, etc.) about their Payday Super update timeline and whether QE reporting is supported
- Review your pay cycles and understand how many super payments you will need to make each month under the new rules
- Model the cash flow impact. Instead of one quarterly lump sum, you will be making smaller, more frequent payments. For some businesses this actually smooths out cash flow.
- If you use the SBSCH, download all your records before 30 June and transition to an alternative provider
- Talk to your BAS agent or bookkeeper about getting your payroll reconciled before 1 July so you start the new system with clean records
- Check your employee super fund details are up to date. Incorrect fund details are one of the most common reasons payments are rejected or delayed.
👉 ATO Payday Super checklist for employers
What About Sole Traders and Company Directors?
If you are a sole trader with no employees, Payday Super does not apply to you. You are not required to pay yourself super, although it is something I always recommend thinking about early.
However, if your business operates as a company and you are a director taking a wage, super still applies to those wages. You will need to pay super on each payday just like any other employee under the new rules.
Final Thoughts
Payday Super is the biggest change to employer super obligations in decades. But it does not need to be overwhelming.
The businesses that will find this transition easiest are the ones that start preparing now, not in the last week of June. Check your software, understand the cash flow impact, download your SBSCH records, and make sure your payroll is in good shape before 1 July.
If you would rather hand all of this over to someone who does it every day, that is exactly what we are here for. We offer a free one-hour consultation to chat through your needs and make sure you are covered.
☎️ 0402 831 073
