Payday Super Is Now Law – What Employers Must Do Before 1 July 2026

Parliament passed laws on 4 November 2025 to give effect to Payday Super. 

The new laws will significantly impact payroll operations, cashflow timing, and employer compliance obligations.  They require that from 1 July 2026 employers pay superannuation contributions for employees within 7 business days from the date salary and wages are paid, rather than on a quarterly basis.  This is a fundamental change to employer obligations in Australia. Employers need to take steps to ensure their systems, processes and software are ready.

Introduction

I refer to a comprehensive article previously published by our own Glenn Brewster which covered many of the key points and changes under Payday Super.

Since Glenn’s article the new rules have now passed into law, with no significant changes to the analysis in our previous article.

The ATO have finalised their practical guidance on how they will approach compliance in the first year of the new rules. PCG 2026/1 adopts the now familiar ATO risk-based compliance framework and outlines how the ATO will assess employer compliance risk in the first year of the new regime.

PCG 2026/1 First Year Compliance Approach

The ATO acknowledges concerns that employers may not have sufficient time to deploy, test and embed changes within their payroll systems by the 1 July 2026 start date, however also emphasise that superannuation must be accurately calculated and received by funds within seven business days from pay day post 1 July.  The PCG notes that the Commissioner of Taxation does not have any discretion as to how the Payday super laws apply to employers.

The ATO’s first year approach will allocate employers with SG shortfalls into low, medium and high risk categories.  The level of ATO compliance attention will depend on the category into which the employer falls.

Low risk — “You attempted to do the right thing”

Low-risk employers should not expect the ATO to have cause to review their actions.

An employer will be in the low-risk zone where all of the following are met:

• The employer attempted to ensure that all individual base SG shortfalls for employees were nil on the qualifying earnings (QE) day by making on-time contributions equal to or exceeding the required SG amount.
• Some or all eligible contributions were not received by the relevant fund (and allocable for the benefit of the employee) on time, for example due to clearing house or processing delays.
• The contributions are received by the relevant funds and allocable for the benefit of employees as soon as reasonably practicable, resulting in individual final SG shortfalls of nil for all employees for that QE day.

Medium risk — “Transitioning, but still on old timing”

Medium-risk employers can expect ATO compliance resources to be applied to investigate the SG shortfall, though these cases will receive less priority than high-risk employers.

An employer will be in the medium-risk zone where:

• An SG shortfall arises under the new Payday Super timing requirements; and
• The individual final SG shortfalls for all employees are nil by 28 days after the end of the quarter in which the qualifying earnings were paid (that is, the employer has effectively continued to pay superannuation under the former quarterly timing rules).

High risk — “Amounts still overdue”

High-risk employers will receive the full attention of the ATO and the highest priority allocation of compliance resources.

An employer will be in the high-risk zone where:

• An SG shortfall remains unpaid 28 days after the end of the quarter in which the qualifying earnings were paid.

This structured approach makes clear that while the ATO recognises genuine attempts to comply during the transition to Payday Super, persistent or unresolved shortfalls will attract attention.

What Employers Need to do Next

Employers should now be reviewing whether their software, systems and processes are ready. This includes:

• Confirming with your payroll software provider when updates for Payday Super will be released and whether additional modules or fees apply.
• Training responsible staff on the new rules or ensuring third party payroll providers are ready for the new rules.
• Planning cashflow impact due to the higher frequency of payments required.
• Ensuring super is received by their employee’s funds within seven business days of pay day.
• Checking that Qualifying Earnings is correctly calculated by their payroll software.
• Implementing controls to detect errors, overpayments and bounce‑backs.
• Investigating alternatives if currently using the ATO Small Business Super Clearing House.

Given the very short period of time remaining until the start date, preparation is now critical.

How can we help?

Baumgartners can assist by undertaking a review of your payroll systems and processes to ensure compliance, or consulting with the person or team responsible internally for payroll to ensure they are up to speed on the new rules.

Baumgartners have a comprehensive bookkeeping and payroll service available for clients who require additional support.

We can also support employers with SG calculations, process reviews, and readiness assessments to ensure alignment with new the new laws and ATO guidance in PCG 2026/1.

We will be holding a client webinar 11am, Wednesday 18 March 2026 to run through the new rules in more detail.  We will forward invitations directly to our clients however please reach out to your usual Baumgartners advisor if you would like to register your interest or have any questions on Payday Super.