Payday Super: What your business needs to know

A tax expert warns employers to be aware of the newly proposed Payday Super legislation and guidance, and what it will mean for their business.

Following the introduction of the Payday Super legislation and guidance by Parliament and the Australian Taxation Office (ATO) on 9 October, the tax community has passed its judgement on what it will mean for employers.

When the Payday Super legislation was introduced to Parliament last week (Thursday, 9 October), advocates and service providers welcomed the move, as it was intended to stop wage theft in the form of unpaid super.

After the introduction of the legislation, the ATO released a practical guidance guideline on the same day, which outlined its compliance approach for the first year.

What is payday super, and what will it do?

Judy White, BDO executive director of tax, told Accountants Daily these developments related to the mandatory superannuation guarantee contribution system in Australia, where employers were required to make super contributions in relation to certain earnings of employees – currently at 12 per cent of those earnings.

Under the proposed reforms, employers would be required to make contributions on a “payday basis” rather than on a quarterly basis as what it is now under the current legislation.

This would mean employees would be required to make contributions by the 28th day of the month after quarter end – 28 July, 28 October, 28 January, and 28 April – after the reforms became law and commenced on 1 July 2026.

White’s observations on the legislation and guidance

According to White, there were numerous observations and comments to be made in regard to the legislation and guidance following an in-depth review.

From her initial review, White’s overarching comments and features to be aware of included the legislation being “much of the same”, beware of the ATO in the first year and beyond, the seven-day compliance period, when contributions were considered made, the definition of a business day, and automatic super shortfall assessments.

From these features flagged by White, she noted the legislation was “much of the same” compared to the draft legislation issued in March 2025.

“This is the case, although there were significant levels of advocacy for change and constructive feedback for improvements by stakeholders and industry advisers, since the release of the Treasury framework in September 2024 and the draft legislation in March 2025,” she said.

White also said it was important to “beware of the ATO” as it had issued its compliance approach, which stated concern employers would not have had sufficient time to deploy, test and embed changes within their payroll systems and business processes before 1 July 2026.

The guidance also acknowledged that this would increase the risk of non-compliance by employers, yet it didn’t provide sufficient relief in any of the provided examples for such circumstances.

“Noting that the low-risk examples are very limited circumstances, that relates to rejected contributions and employee super fund mergers,” she said.

“Instead, employers need practical guidance from the ATO’s practical compliance guideline, including setting out examples relating to delays that are made in the processing of the contributions and confirming that the employer will still be considered low risk since this is out of their control.”

According to White’s analysis, the main significant change since the draft legislation was in relation to the seven-day compliance period, as it was originally proposed to be a seven-calendar-day period but had been changed to a seven-business-day period.

“This is a helpful and welcome development. However, in my opinion, it falls short in providing a fair system for employers doing the right thing,” White said.

“This is because employers may still be non-compliant for issues arising out of their control arising during the processing of the contributions.”

Accountants weigh in on conversation

Two Sides Accounting founder Natalie Lennon said that, in terms of the government’s approach to the legislation, it was odd that it was not looking to fully enforce the super guarantee charge (SGC) unless the super was paid after 28 days following the end of the quarter.

“Basically, as we all guessed, the government will introduce it but not enforce it to begin with,” Lennon said.

“I understand why the government does this, but it makes it hard as an advisor to advise our clients to do the right thing to maintain compliance if there is no consequence.”

Lennon noted she also understood that there needed to be a transition period in the beginning, yet it seemed “silly” to implement something that wasn’t going to be fully enforced.

“They need to fix the SGC process first, as it is clunky and time-consuming,” she said.

“With the process, it’s required to download an Excel from the ATO portal, resave it to the latest Excel, manually enter in each employee’s details for each quarter, upload to the portal and make payment that day as the Excel calculates the interest on the day the Excel is done.”

“From there, the ATO then takes up to 28 days to process, meaning if it is the first time the super is late, you then need to call the ATO to obtain the payment details ...”