Payday Super Reform: A Major Shift in Australia’s Superannuation System
Written by Dylan Sinclair & Anna Colley
As part of the 2023-24 Budget, the Australian government announced the Payday Super reform, a key measure designed to address unpaid and underpaid superannuation contributions. Beginning July 1, 2026, employers will be required to pay Superannuation Guarantee (SG) contributions in alignment with employee wage payments, replacing the current quarterly system. This reform is a vital component of the Securing Australians’ Superannuation Package and aims to protect workers' retirement income.
Employee Benefits
The most significant change under the Payday Super reform is the impact on employees. Approximately 8.9 million workers will see their retirement savings grow faster due to more frequent super contributions. The reform ensures that super payments are made alongside wages, enabling employees to track their contributions in real-time and detect any underpayment early. This enhanced transparency empowers workers to hold employers accountable and report non-compliance to authorities like the Australian Taxation Office (ATO) or the Fair Work Ombudsman.
Compliance for Employers
Employers will be legally required to submit SG contributions within seven calendar days of each payday. Non-compliance will result in penalties under an updated SG charge system, which includes daily interest on unpaid contributions and an "administrative uplift" charge of up to 60%. Employers can reduce their penalties by voluntarily disclosing unpaid super, incentivising swift correction of any errors.
While these reforms may initially seem burdensome, they simplify the payroll process by automatically applying late contributions to the earliest outstanding payment. Additionally, as payroll software has improved in recent years, small businesses will be able to find cost-effective tools to handle payday super obligations. The ATO’s Small Business Superannuation Clearing House will be retired by 2026 as a result of these improvements.
A Stronger Superannuation System
The reform aligns with the government's broader efforts to improve Australia’s superannuation system. These include raising the SG rate to 12% by July 2025, paying super on Government Paid Parental Leave, and criminalising superannuation theft. The government is also working to make super tax concessions fairer and improve system equity through a revised annual performance test.
Enforcement by the ATO
The ATO will play a central role in enforcing compliance under the new system. Enhanced data matching between Single Touch Payroll (STP) systems and superannuation fund reports will allow the ATO to detect non-compliance faster. Employers who voluntarily disclose missed payments will face reduced penalties, but those who repeatedly fail to meet obligations will incur significant fines.
The Payday Super reform marks a significant improvement in the way superannuation is managed in Australia. By aligning super payments with wages, the reform provides more transparency, ensures employees receive their full entitlements, and makes it harder for employers to underpay superannuation. This reform is expected to lead to a stronger, fairer super system benefiting both employees and employers alike. If you would like further information on this topic, please feel free to contact our team at Salt Financial Group, or alternatively read more here on the ATO’s website.