Tax Alert - Payday Super laws will start from 1 July 2026

Lowe Lippmann Chartered Accountants

Payday Super laws will start from 1 July 2026

Payday Super reforms have now received Royal Assent and is now law. The new legislation will require the payment of eligible superannuation guarantee (SG) contributions to be in line with the frequency of the employer’s pay cycle, effective from 1 July 2026.

The payday super changes will require employers to remit SG contributions at the same time they pay employees’ salary and wages (known as ‘ordinary time earnings’ or OTE). Currently SG contributions are required to be paid quarterly.

These changes will apply to all employers, whether have pay cycles weekly, fortnightly, monthly or irregularly. SG contributions must generally arrive in an employee’s chosen super fund within seven business days of each payday.

The motivation for these changes is to identify unpaid super much sooner, and reduce unpaid SG by aligning timing and increasing transparency.

What are the changes that Employers need to be aware of?

Same day payment	SG must be paid to the employee’s super fund on the same day OTE is paid to employee.
Timing for payments	Employers must calculate SG for each pay cycle and make contributions that reach the employee’s fund within seven business days after the pay cycle day.
Imposing SG charge	If contributions are not received in time, the employer will have a SG shortfall and will be liable for the SG charge, including interest and administrative penalties. There are limited exceptions and short grace periods for newly engaged employees and some irregular payments. Notional earnings will accrue on unpaid SG to compensate the employee for lost superannuation earnings. Note the SG charge will be calculated on OTE, not on salary, aligning it with the basis for calculating underpaid super.
Imposing penalties	When an amount of SG charge is unpaid 28 days after it becomes due and payable, the ATO is required to give the employer a written notice to pay a specified amount of SG charge that is unpaid at that time. The employer will become liable to pay a penalty if they do not pay the amount in the notice in full within 28 days of the notice being issued. The penalty is equal to 25% of the outstanding amount (or 50% for certain repeat cases within the previous 24 months). The penalty cannot be remitted and does not accrue a general interest change.
SG statement changes	Employers will no longer use an SG statement for underpaid SG; instead, voluntary disclosure can be used to reduce the administrative uplift.
Tax treatment	On-time payments, late payments and any SG charge will be deductible.

What steps can Employers take before 1 July 2026?

Although not yet law, there are steps which can be taken now by employers to prepare for the changes and be in the best position to be ready for 1 July 2026. This includes:

Consider starting to make superannuation payments more frequently.
Confirming that employees’ superannuation fund details are up to date.
Reviewing internal processes around superannuation reporting.
Starting to look for alternatives, if the employer currently using the ATO’s Small Business Super Clearing House (SBSCH), as this will close from 30 June 2026.
Reviewing cash flow to understand how moving to paying superannuation more frequently may impact the business.

Employers are urged to check if their existing payroll or accounting software already includes super payment functionality, otherwise they should look for options from super funds or digital service providers offering payroll services, software or commercial clearing houses (other than SBSCH). We note that both Xero and MYOB have automatic superannuation contribution functionality in their payroll software and do not need an external clearing house.

The ATO is working closely with tax professionals, digital service providers and superannuation funds to help prepare small business employers for the 1 July 2026 start date.

What are the benefits for Employees?

The motivation for these changes is to identify unpaid super much sooner, and reduce unpaid SG by aligning timing and increasing transparency.

Payday super will reduce the time between when income is earned and when it is invested into the employee’s superannuation fund, giving employees earlier exposure to compound returns and reducing the incidence of “super theft” where employer contributions are delayed or missed and harder to detect.

Overall, more frequently contributions are expected to increase retirement balances materially over decades for many, particularly for younger employees.

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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FEDERAL BUDGET 2026-27

May 12, 2026

SUMMARY AND FULL COMMENTARY UPDATES

Practice Update – May 2026

May 4, 2026

Special Topic: Payday Super changes apply from 1 July 2026, act now to be prepared! The ATO has issued further guidance on Payday Super changes that apply from 1 July 2026. In particular, the ATO released a ‘Payday Super checklist for Employers’ ( click here ), which is a good summary of the tasks that should be completed before 1 July 2026, and now is the time to act. Understanding ‘qualifying earnings’ From 1 July 2026, employers will calculate super using ‘qualifying earnings’ ( QE ) instead of the current ‘ordinary time earnings’ ( OTE ). For many employers, the new concept of QE is broader than OTE, but it should not change the amount they need to pay for their employees. However, it may require updates to payroll software configuration and reporting. Employers should review and prepare to correctly map pay codes now to meet reporting obligations and ensure readiness when their updated payroll software is available. QE include the following payments: OTE (ie. payments for ordinary hours of work), including certain types of paid leave, allowances, bonuses and lump sum payments. There are no changes to what payments are considered OTE under Payday Super. For a full list of payments which are included within OTE – click here . All commissions paid to an employee. Salary sacrifice amounts that would qualify as QE had they not been sacrificed to superannuation. Earnings paid to workers who fall under the expanded definition of employee, including payments to independent contractors paid mainly for their labour. Some payments may fall into more than one category of QE, such as commissions, and those payments are covered only once to the extent of the overlap in categories. The total QE for a pay period is determined by aggregating all qualifying payments made to or for an employee on the relevant day, forming the basis for calculating superannuation guarantee ( SG ) contributions. Each payday, employers will need to report both year-to-date QE and superannuation liability for each employee through Single Touch Payroll ( STP ). Employers should confirm their updated payroll software has this reporting functionality built in. Understanding new timing requirements for super contributions From 1 July, employers are responsible for ensuring that super contributions reach super funds within 7 business days of the relevant payday , calculated on the QE amount. Super funds will have 3 business days (down from 20 days) to allocate or return contributions that cannot be allocated. There is currently no obligation for the Super fund to confirm that an employee contribution has been allocated successfully, however if 3 days have elapsed we can accept that the employee contribution has been processed correctly. A super payment only counts once it is received by the employee’s superannuation fund, not when it is submitted. Submitting on day seven may not allow enough time, and we note there is no extension for rejected payments - so employers must ensure there is enough time to correct any errors and for SG contributions to reach funds within the 7 business days. Understanding importance of testing payroll software before 1 July 2026 Prepare now, review your payroll system readiness, engage with payroll software providers and ensure the functionality for these new changes will be supported. It has been widely suggested that new payroll software functionality is tested and everything is running smoothly before 1 July. Note that super payments for pay cycles in July 2026 may be due before your final quarterly super payment is due on 28 July 2026 (ie. for the June 2026 quarter, being April to June). Contributions received on or before 28 July 2026 will reduce any super owing for the June 2026 quarter first . If there is any remainder, contributions will then be used under Payday Super. If you pay on time for the June 2026 quarter and Payday Super you do not risk incurring penalties. The ATO has provided an example of this issue ( click here ), and explains that if the employer pays the correct amount for the June 2026 quarterly payments and the first Payday Super payment (ie. for the first pay cycle in July, which could be weekly or fortnightly) is paid in full both contributions will be made on time. Understanding cash flow pressure Employers may have multiple super payments due during July 2026, including: super payments for each Payday (after 1 July 2026); plus the final quarterly super payment due 28 July, for June 2026 quarter (ie. April to June). Employers should review their expected pay cycles for July 2026 to understand the impacts of paying super each payday after 1 July 2026. Employers may consider setting aside additional funds to make sure they can meet their obligations. If cashflow permits, employers can pay the June 2026 quarter super on or before the first payday in July (ie. the first pay cycle in July, which could be weekly or fortnightly). If an employer can do this, your business will have: a more seamless changeover to the Payday Super system; and time to correct any rejected payments before the 28 July deadline. We recommend that all employers take actions as soon as possible to be best prepared for the Payday Super changes coming in from 1 July 2026. If you require assistance, please contact your Lowe Lippmann representative.

Practice Update – April 2026

April 12, 2026

Know when a new logbook is required Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (ie. fuel, registration, insurance and depreciation) for tax deductions. Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period. Relying on a logbook that no longer represents a client's work-related travel may result in them claiming more, or less, than they are entitled to. A new logbook may be required when a taxpayer: moves to a new house or workplace — updating their residential or work address may then be necessary; or has changes to their pattern of use of the car for work purposes — checking that they are still doing the same role and routine may then be necessary. Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period. Clients who purchase a new car during the income year and want to continue relying on their previous car's logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state: they are replacing their original car with a new car; and the date that nomination takes effect. Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car. When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).