Payday Super: What Employers Need to Know

In the latest Federal Budget delivered in May 2023, the government announced the introduction of ‘payday super’, which is proposed to come into effect on 1 July 2026. In this article, we will break down the basics of what payday super is, the impact on employers, and why the government has decided to look at making this change. As of now, payday super is just a proposal and not yet law.

What is Payday Super?

Payday super means paying your employees' Super Guarantee (SG) on the same day as their net pay, rather than once a quarter. This proposed legislation change aims to kick off from July 1, 2026.

What will the impact on employer be?
The switch to payday super is a significant change for many employers, but there is still plenty of time to get ready. If you already align SG contributions with your pay cycle, no change is needed. If you’re your business will need to adjust its processes by July 1, 2026.

Some benefits of paying super on payday include;

• It may help reduce the risk of missed payments
• Alleviates payroll responsibilities
• Makes your business more attractive to employees
• Reduces strain on cashflow, given that super is paid in smaller payments with each pay run, as opposed to once quarterly, as a lump sum

Why is the Government Proposing Payday Super?

The government wants to strengthen Australia's superannuation system, to ultimately offer a better retirement for workers. For instance, a report suggests that a 25-year-old earning the average income could be $6,000 or 1.5% better off at retirement if their super was paid on payday. Payday super also makes it harder for some employers to avoid paying SG.

What are the likely consequences of not adopting Payday Super by July 1, 2026?

Currently, employers must pay super at least four times a year, which is 28 days after the quarter. If they fail to meet these obligations, they face a penalty called the SG charge. This charge is more than the unpaid super amount, and not tax-deductible. We expect similar penalties to be imposed on business’s who do not adopt payday super from July 1, 2026, given that they will then effectively be paying super late.

Payday super is certainly a significant change with regards to timing of super payments, which will require a payroll process change. Despite this, it is expected that paying super more frequently will not only save businesses time, but assist them with managing the cashflow impact of super.

If you would like to learn more about the likely implications of payday super on your business, please contact LINK Advisors and we can assist.