People Matters - with HR Central

Changes to Superannuation from July 2026

 

From 1 July 2026, a major change to Australia's superannuation system will come into effect. Known as Payday Super, the reform requires superannuation guarantee (SG) contributions to be paid at the same time as wages instead of quarterly. This means that every time payroll is processed, super must also be calculated and paid so it reaches the employee's nominated super fund within seven business days of payday.

For employers, this represents a shift from a periodic compliance activity to an ongoing payroll responsibility. Super must be paid each pay cycle, whether wages are processed weekly, fortnightly or monthly. New employees must receive their first super contribution within 20 business days of their first wage payment. Late or missed payments may attract the Super Guarantee Charge (SGC), which will be calculated on qualifying earnings with interest accruing daily and an administrative uplift component. The Australian Taxation Office (ATO) will continue to administer and enforce these requirements, with a supportive compliance approach during the first year for employers demonstrating genuine efforts to comply.

 

How super will be calculated from 1 July 2026

The SG rate will remain at 12 percent, but a new concept called qualifying earnings will standardise the earnings base used to calculate super. For many businesses, including those operating in the timber industry, the total super paid may not change significantly. However, the way earnings are defined and reported will become more consistent.

Qualifying earnings generally include ordinary time earnings, all commissions, certain allowances, bonuses and paid leave, salary sacrifice amounts that would otherwise be earnings, and payments to contractors who are treated as employees for superannuation. Lump sum termination payments, overtime hours, and reimbursements are excluded. This may be particularly relevant in timber operations where allowances, shift variations or labour-based contractor arrangements are common.

Employers must also report both qualifying earnings and super liability through Single Touch Payroll (STP) every pay cycle - a significant expansion from current reporting requirements.

 

Closure of the Small Business Superannuation Clearing House

The Small Business Superannuation Clearing House will close permanently on 1 July 2026. No new registrations will be accepted after 1 October 2025. Employers currently relying on this service must transition to an alternative clearing house or payroll-based solution before that date to avoid disruption and should download all historical records before 30 June 2026 as these will become permanently inaccessible after closure.

 

Preparing for the change

Payday Super will require employers to treat super in a similar way to PAYG withholding, calculating and paying it each pay run. Businesses that already pay super with payroll may see limited operational change, while those that currently pay quarterly may need to review payroll systems, cash flow planning and internal approval processes.

This will increase the importance of payroll accuracy. Variations in allowances, seasonal workloads or retroactive pay adjustments can affect super calculations and may require corrections if errors occur. Ensuring payroll systems are configured correctly, employee classifications are accurate, super fund details are up to date, and STP reporting capabilities are in place will help reduce compliance risk.

 

What are potential risks?

Moving to Payday Super may impact cash flow, especially for smaller operators that previously relied on quarterly payment cycles. More frequent payments also increase the importance of reliable payroll systems, as manual processes create a higher risk of delays or rejected contributions. Reviewing processes early, strengthening time and attendance practices and resolving payroll issues before finalisation can help employers adapt smoothly to the new requirements.

 

More information

Further detail on Payday Super, including employer obligations, timing rules, and examples, is available from the Australian Taxation Office at: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/payday-super

Information on how superannuation obligations interact with workplace laws, awards, and employment standards is available from the Fair Work Ombudsman at: 

Fair Work Super