THE ATO is reining in superannuation compliance with Payday Super legislation. The substantial changes create new challenges for tax, payroll and human resources teams across all organisations.

Starting 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) contributions every pay cycle, instead of each quarter. This reform will increase SG transparency, with employees being able to check contributions after each payday rather than waiting up to four months.

The changes are designed to ensure employees receive their SG contributions in a timely manner and are poised to increase the employee-initiated SG notifications both to the ATO and the Fair Work Ombudsman, which is a newly implemented avenue for employees to report non-compliance.

Payday Super bills — parliamentary timeline

A parliamentary sitting occurred on 9 October 2025, introducing the following two bills to the House of Representatives with the view to implement Payday Super elements:

• Treasury Laws Amendment (Payday Superannuation) Bill 2025

• Superannuation Guarantee Charge Amendment Bill 2025

The substantial changes create new challenges for tax, payroll and human resources teams across all organisations.

The proposed reforms to Payday Super were originally announced on 2 May 2023, with the key difference from existing requirements being that SG contributions are to be made in alignment with pay cycle frequencies (within seven calendar days from the date of payment of salaries/ wages), instead of the existing quarterly basis, from 1 July 2026.

In the Parliamentary sitting on 9 October, Treasurer Jim Chalmers highlighted that whilst most employers do the right thing, some disreputable employers are exploiting their employees. The Treasurer also emphasised that, due to being an employee entitlement, unpaid SG is a form of wage theft, with the Bill aimed at putting a stop to this.

“ With the recent criminalisation of wage theft, which came into effect from 1 January 2025, it is therefore crucial that employers take measures to ensure compliance with regulatory requirements in relation to wage payments, including SG. ”

October 2025 changes to Payday Super legislation

The key differences between the draft exposure released in March 2025 and the new Bills that entered Parliament are outlined below:

• Instead of seven calendar days to make contributions from the pay date, it will be seven business days.

• Instead of 21 calendar days to contribute to funds for new employees, employers will now have 20 business days.

• In addition, there will be an expansion of this timeframe pertaining to contributions to new funds for existing employees; instead of calendar days, the contribution timeframe measurement will transition to business days.

• There may be the ability for any penalty assessment to be reduced to nil, where it is determined by the Commissioner that an exceptional circumstance has arisen.

• Only contributions made prior to 1 July 2026 will have late payment offsets apply.

– For example, under the current legislation, if an employer missed the SG due date (which currently operates on a quarterly basis) and the SG payment was made after the due date but prior to the ATO raising an SG Charge assessment, the employer would be able to lodge a Superannuation Guarantee Charge statement.

The key difference from existing requirements being that SG contributions are to be made in alignment with pay cycle frequencies instead of the existing quarterly basis, from 1 July 2026.

– The employer could opt to use a late payment offset to offset the shortfall and nominal interest components of the SGC and put the payment towards future super payments (noting that this is limited to a period of no more than 12 months from the beginning of the quarter).

– This is dependent on the employer meeting the following conditions:

• Payment is made to the employee’s super fund.

• Payment is made prior to the date the original SGC assessment was made.

• Lodgement of late payment offset election in the SGC statement within four years of the original SGC assessment date.

– Due to the implementation of Payday Super, late payment offsets on SG contributions will no longer be available from 1 July 2026.

– Employers must pay SG contributions within seven business days of each payday.

• Paying late SG payments prior to an ATO SG Charge assessment will not reduce the SG charge.

ATO compliance approach will involve risk categorisation

The proposed start date of 1 July 2026 has remained unchanged, however for the period 1 July 2026 – 30 June 2027, the ATO have advised in their recently released Practical Compliance Guideline, Payday Super – first year ATO compliance approach (PCG 2025/D5) that a ‘grace period’ will be provided for some employers, dependent on circumstances and associated risk classification.

For example, the ATO have cited that between 1 July 2026 and 30 June 2027, the ATO will not have cause to review actions of employers classified as ‘low risk’. However, from 1 July 2027, ‘low risk’ employers who have individual base SG shortfalls for one or more employees for Qualifying Earnings (QE) Days on or after that date may be subject to compliance action in relation to those QE Days.

Payday Super legislation risk categories

The ATO has categorised employers into ‘risk zones,’ spanning low, medium, and high risk. The ATO intend to apply compliance resources based on these risk levels, prioritising the highest risk categories first. These are employers who have not paid the minimum amount of SG contributions for their employees. Essentially, employers with an individual final SG shortfall greater than nil for one or more employees on the QE Day.

The ATO has provided guidance, as per Tables 1 and 2 of PCG 2025/D5, respectively, regarding the risk classification of employers and the associated requirements for each risk zone.