Publish Date
Apr 27, 2025
Australia Bulletin
On 14 March 2025, Federal Treasury released the Payday Super draft legislation[1] (Draft Law) for consultation, which closed on 11 April 2025. This draft represents significant changes to the superannuation guarantee (SG) system, with a proposed effective date of 1 July 2026. The introduction of Payday Super will require employers to fundamentally reassess how they manage superannuation compliance.
The Draft Law proposes to implement key design principles outlined in the September 2024 fact sheet released by Federal Treasury,[2] while also addressing several important questions that had arisen. A&M’s Australia Tax practice has discussed the fact sheet in an earlier article.[3]
Under the current SG regime, employers can make super contributions on a quarterly basis. Payday Super will change that. Starting 1 July 2026, employers will be required to pay SG contributions at the same time as salary or wages are paid — or no later than seven calendar days thereafter. There are very few exceptions to this seven-day rule, one limited exception being for new employees.
This reform is designed to:
Under the current SGC regime, SG shortfalls must be calculated by reference to employee “salary and wages,” rather than the OTE base.
The term QE replaces the earnings base used to calculate SG. It closely mirrors the current OTE but is now formally defined to also include:
This change ensures greater consistency while modernising the terminology for clarity and compliance.
Employers will be required to ensure super contributions are received by an employee’s fund and allocated to the employee’s account within seven days of payday. It is likely that this requirement will prove problematic in some situations.
The Draft Law provides a series of exceptions to this seven-day requirement for contributions, including:
The maximum contributions base (MCB) will continue to act as a ceiling on the maximum amount of contributions payable by an employer for an employee. However, the previously calculated quarterly MCB will now apply annually. However, watch this space as this is likely to produce unintended negative outcomes for both employers and employees and so may yet be amended.
The SGC regime will continue to apply to employers who fail to meet their obligations to make superannuation contributions on behalf of their employees. The ‘SG shortfall’ for a given employee will comprise multiple components as summarised below:
Employers will no longer need to submit SGC statements each quarter. The ATO will now rely on data from Single Touch Payroll (STP) and super fund reporting to automatically identify shortfalls and assess liability.
Employers can submit voluntary disclosure statements to correct errors before the ATO makes an assessment. This process encourages early self-reporting and offers financial incentives.
The draft law replaces the static $20 administrative fee with a dynamic administrative uplift:
This structure rewards proactive compliance and good governance but is more restrictive than the previous practice covering remission of penalties.
Both on-time and late SG contributions — as well as the SG charge — will now be tax deductible, though general interest charges and penalties remain nondeductible.
While these changes won’t be implemented until mid-2026, now is the time to start reviewing and adapting our processes. As we learned with the introduction of STP, this is not just something for payroll to solve. The more proactive you can be, the greater the reduction of potential risks and penalties.
If you have any further questions on Payday Super and would like to discuss how this might impact you and your appropriate next steps, please reach out to a member of the A&M Employment Taxes team.
[1]“Payday super – exposure draft,” Australian Government, Treasury, Consultation process completed 11 April 2025, Payday super – exposure draft | Treasury.gov.au
[2] “Payday Super,” Australian Government, Treasury, Fact sheet, Payday Super factsheet
[3]Daniel Dass et al., “Payday Super – Everything you need to know,” Alvarez & Marsal, January 7, 2025, Payday Super – Everything you need to know | Alvarez & Marsal | Management Consulting | Professional Services
https://www.alvarezandmarsal.com/thought-leadership/payday-super-draft-legislation-released