What’s Changing?
From 1 July 2026, all Australian employers will be required to pay Superannuation Guarantee Contributions (SG) at the same time employees are paid their “qualifying earning” (QE).
QE is a new concept introduced under the updated legislation and includes:
- Ordinary Times Earnings
- Salary Sacrifice Superannuation Contributions
- Any other amounts which are currently considered part of an employee’s salary or wages for SG purposes
Why is the Government making this change?
- To address the billions of dollars in unpaid or late superannuation
- To ensure quarterly super payments are no longer permitted for qualifying earnings on or after 1 July 2026
- To improve employee’s retirement savings by ensuring contributions reach their super funds sooner and have more time to grow
- To provide the ATO with near-time visibility of Superannuation Guarantee compliance through Single Touch Payroll
Who is affected?
This affects all employers that are currently required to pay the SG will be covered, whatever their size or industry.
Employers’ new core obligations from July 2026
Alignment of SG and Qualifying Earnings (QE)
Each time an employer pays qualifying earnings (QE) to an employee (ie on each pay day) they must also ensure the corresponding Superannuation Guarantee (SG) contribution (currently 12%) is paid
For new employees commencing on or after 1 July 2026, employers will have 20 business days from the employee’s first payday to make their initial contribution.
7 Business Day Payment Deadline
SG Contributions must be received by the employee’s super fund within seven (7) business days of each payday
Enhanced Single Touch Payroll (STP) Reporting
From 1 July 2026, employers will be required to report through STP for each pay event:
- The amount of QE paid; and
- The corresponding SG liability for each employee
Updated SG Charge – Pay on Time or Pay More
If SG Contributions are not received by the employee’s fund within 7 days of payday, employers may be liable for the Superannuation Guarantee Charge (SGC) even before the ATO issues a formal assessment.
Penalties may include:
- SG Shortfall: Calculated based on qualifying earnings (QE) not just ordinary time earnings
- Administrative Uplift: Up to 60% of the SG shortfall. This may be reduced is late payments are made to the employee’s fund and voluntarily disclosed to the ATO
- Post Assessment Penalty: 50% of any unpaid SGC still outstanding 28 days after the ATO issues a notice of assessment
- Daily Interest: General Interest Charges (GIC) currently 10.61% per annum, calculated daily from the day after the due date
Important:
The SGC itself is tax-deductible; however, penalties and post-assessment interest are not.
Out of Cycle Payments (e.g. bonuses) will not trigger the 7-day business-day deadline until the next regular payday
Recognising and Rectifying Late Super Contributions
Key Points for late contributions:
- Any late payments must still be sent to the employee’s super fund as soon as possible
- The ATO will automatically allocate late contributions to the earliest outstanding pay period
- Prompt voluntary disclosure can reduce administrative uplifts and minimise penalties
Important Changes from 1 July 2026
- The Small Business Superannuation Clearing House (SBDCH) will close
- Business should plan to adopt payroll software or a compliant commercial clearing house that supports SG payments on payday
- Super funds will have only three (3) business days to allocate or return contributions
- SuperStream standards will be updated to allow faster New Payments Platform (NPP) transfers and clearer error messaging
Supporting a Smooth Transition for Small Business
- Review payroll systems and banking cut-off time – ensure they support same-day super payments
- Map your cash flow – make sure funds are available for every pay run
- Update employment contracts and payroll calendars – reflect new SG timing requirements
- Staff – ensure awareness of payday SG rules and STP reporting changes
- Capture employee super fund details promptly – use appropriate onboarding documents
- Consider Voluntary Disclosure – report any late or short payments to the ATO immediately to reduce penalties
Common Mistakes to Avoid
- Quarterly payments will not be accepted after 1 July 2026
- Do not delay SG payment beyond 20 business days for new employees starting on or after 1 July 2026
- Do not ignore SuperStream error messages – unallocated payments will still attract SGC
- Do not rely on the soon-to-be-retired SBSCH without arranging an alternative
- Do not forget that interest and penalties are calculated daily – delays are costly
Consequences of non-compliance
- Mandatory SGC (shortfall + daily interest + up to 60% uplift)
- Additional 50% penalty if SGC is not paid within 28 days of ATO assessment
- Public naming of significant non-compliers by the ATO
Need Help?
Transitioning to Payday Super will require careful planning. Please reach out to Fusion Solutions as soon as possible to ensure a smooth transition. We can assist with reviewing your payroll setup, ensuring compliance, and provide guidance on any necessary changes.
