As a business owner in Australia, staying ahead of regulatory changes is crucial for your success. One significant shift on the horizon is the introduction of Payday Superannuation, set to take effect from July 1, 2026.
This blog post will explain what this means for you and how you can prepare your business for this important transition.
What is Payday Superannuation?
In essence, Payday Superannuation requires employers to pay their employees’ superannuation guarantee (SG) contributions simultaneously with their salary and wages. This represents a major change from the current quarterly payment system and aims to ensure more timely and accurate superannuation payments for Australian workers.
Key changes you need to know
- Tighter Payment Deadlines:
- Employers will have just 7 days from payday to ensure SG contributions reach employees’ superannuation funds.
- This applies each time you pay ordinary time earnings (OTE) to an employee.
- Updated Super Guarantee Charge (SGC):
- If you miss the 7-day window, you’ll be liable for an updated SGC.
- The new SGC structure includes the outstanding SG shortfall, notional earnings, and an administrative uplift.
- Good news: The SGC will become tax-deductible, aligning the tax treatment with regular super contributions.
- Small Business Superannuation Clearing House (SBSCH) Retirement:
- The SBSCH will be decommissioned from July 1, 2026.
- Small businesses will need to transition to commercial alternatives for super payments.
- SuperStream Improvements:
- Super funds will have just 3 business days (down from 20) to allocate or return contributions.
- Expect enhanced error messaging to help quickly resolve any issues.
- Single Touch Payroll (STP) Updates:
- You’ll need to report both OTE and total super liability for each employee through STP.
How can you prepare?
- Review Your Payroll Process: Start assessing your current payroll systems. Can they handle more frequent super payments? If not, it might be time to upgrade.
- Educate Your Team: Ensure your payroll and finance staff are aware of these upcoming changes and understand the new requirements.
- Budget for Potential Cash Flow Changes: Moving from quarterly to payday super payments may impact your cash flow. Start planning now to smooth the transition.
- Explore New Super Payment Solutions: With the SBSCH being retired, research alternative platforms that can efficiently manage your super obligations.
- Stay Informed: Keep an eye out for further updates from the Treasury and ATO as they engage with stakeholders on these changes.
While Payday Superannuation represents a significant shift in how we manage employee benefits, it also offers opportunities. By streamlining super payments, you can potentially reduce administrative burden in the long run and contribute to a more secure financial future for your employees.
Remember, being proactive is key. Start preparing now, and you’ll be well-positioned to navigate this change smoothly when 2026 rolls around. As always, consider consulting with our financial adviser or accountant for personalised guidance on how these changes will affect your specific business situation.
Contact our KMT advisers for tax advice before extracting wealth from your company.
About our advisers:
Michael Fox has been dedicated to his clients’ success, devising comprehensive wealth strategies for personal and business growth for over four decades. With extensive expertise in business governance and family business succession, Michael specialises in empowering emerging businesses and family enterprises by fostering renewal, enhancing value, and smoothing transitions to the next generation. Please do not hesitate to reach out if you need assistance.
Chrisanthe Lekatis is renowned for her expertise in management accounting, virtual CFO services, and top-tier business advice. She empowers management with tailored strategies for success, streamlining processes to achieve efficient and cost-effective outcomes. Her commitment to building trust and lasting relationships goes beyond professional excellence; it’s a personal ethos. By actively listening and understanding her clients’ businesses and goals, Chrisanthe thrives on collaborative efforts to navigate challenges and collectively achieve their aspirations. Please do not hesitate to reach out if you need assistance.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.
