Payday Super: Breaking Down the Bill Before It’s Passed

If you employ staff, the way you pay superannuation could soon change dramatically. The Federal Government has just introduced the Payday Super legislation into Parliament — it’s not law yet, but if it passes, it will mark one of the most significant shifts to superannuation compliance in decades.

Unlike many proposals that sit on the shelf, this one has momentum. The bill was tabled on 9 October 2025, and all indications suggest it’s moving forward. If enacted, from 1 July 2026, employers will need to pay super at the same time as wages — ending the long-standing quarterly cycle.

For business owners, this presents both a compliance challenge and an opportunity to modernise payroll processes. Let’s unpack what this means for you.

The Short Version: What's Changing?

Currently, you have until 28 days after the end of each quarter to pay superannuation. Under the new rules:

• Super must be paid with wages: You'll pay super at the same time you run payroll—whether that's weekly, fortnightly, or monthly.

• Super must reach funds within 7 business days: The money needs to actually arrive in your employees' super accounts within seven business days of payday, not just be processed.

• This applies to all employers: Whether you have 2 employees or 200, the rules are the same.

Think of it as shifting from quarterly tax instalments to PAYG withholding—except this time, it's for super.

Why the Government Is Doing This

The government's research shows approximately $5.2 billion per year in superannuation goes unpaid across the Australian economy. This happens for various reasons—cash flow challenges, administrative errors, businesses experiencing financial distress, or simply the complexity of managing quarterly payments alongside everything else on a business owner's plate.

The current quarterly system can create visibility gaps. An employee might work for three months before discovering their super payment didn't go through, making it harder to resolve the issue promptly.

Payday Super brings immediate transparency. When super flows with wages, any processing issues are identified within days rather than months, making them much easier to fix while they're still fresh.

This change also levels the playing field. Businesses doing the right thing won't be competing against those using extended payment terms as an unintended competitive advantage. It's about creating a system that works better for everyone—employers and employees alike.

What This Means for Your Cash Flow

The most important thing to know: Payday Super doesn't change how much you pay—the superannuation guarantee rate stays the same (currently 11.5%). What changes is when you pay it.

Currently, you have up to four months to pay super (end of quarter plus 28 days). Under the new system, you'll need to pay it within days of processing payroll. For businesses with seasonal revenue patterns or variable cash flow, this timing shift is worth planning for.

Here's a practical way to approach it:

Many businesses already set aside super when they run payroll, even if they don't remit it immediately. If that's you, you're well-positioned for this change. If you've been using the full quarterly timeframe to manage payments around other business commitments, you'll want to adjust your approach.

The transition strategy: Consider starting earlier than required. From January 2026, try moving to monthly or fortnightly super payments. This six-month lead time lets you:

• Identify how the new rhythm affects your cash management

• Make adjustments to your budgeting and forecasting

• Iron out any process issues before they become compliance matters

• Build the habit while you still have flexibility

Think of it as upgrading your financial systems proactively rather than reactively.

The Technology Side: What You Need to Do

Your payroll system will need to be ready for these changes. Most major payroll providers are already working on updates, but you'll want to confirm:

Check with your payroll provider: Whether you use Xero, MYOB, Employment Hero, or another system, confirm they're building Payday Super functionality and when it will be available.

Verify SuperStream compliance: Your super payments need to be made via SuperStream (most modern payroll systems already do this). The government is upgrading SuperStream to handle faster payments through the New Payments Platform.

Update employee super details: Before July 2026, make sure you have current, correct super fund details for every employee. A new "Member Verification Request" system is being developed that will let you verify details before making payments, reducing rejected contributions.

Test early: When your payroll provider releases Payday Super functionality, test it well before 1 July 2026. You don't want to be troubleshooting on the first pay run under the new system.

SMSFs and Directors: You're Not Exempt

Here's something many business owners miss: if you're a director being paid through your company and receiving super into your SMSF, these rules apply to you too.

Yes, even self-managed super funds need to be ready to receive contributions within the seven-day window. SMSF trustees should talk to their administrators about ensuring the fund can receive SuperStream payments efficiently.

The First-Year Grace Period

The ATO has released a draft compliance guideline outlining how they'll approach enforcement in the first year. While details may change, the indication is that they'll be pragmatic about teething problems provided businesses are making genuine efforts to comply.

This isn't a license to ignore the rules, but it does mean if you've got systems in place and you're making best efforts, a one-off processing hiccup in August 2026 probably won't result in immediate penalties.

The Bigger Picture: Why This Matters

Beyond compliance, Payday Super represents a broader shift in how Australia thinks about superannuation. It's moving from a deferred obligation to a real-time employment cost—similar to PAYG withholding.

For business owners building wealth, this has an upside: your own super contributions will benefit from compound interest over a longer period. An employee earning $100,000 who receives super fortnightly instead of quarterly could retire with an extra $7,700 in their account. Over a full working life, the difference could exceed $30,000.

For your employees, it's even more significant. Younger workers and those in casual or insecure employment (who are most likely to experience unpaid super) will see the biggest benefits.

What Alexander Spencer Can Help With

Navigating payroll changes while running a business isn't easy. Our team stays across legislative changes so you don't have to become a super payment expert on top of everything else you're managing.

We can help you:

• Model the cash flow impact of moving to payday super

• Review your current payroll setup and identify risks

• Coordinate with your payroll provider to ensure readiness

• Structure your business finances to accommodate the new payment cadence

The goal is simple: ensure you're compliant without the administrative burden becoming a distraction from growing your business.

Stay Ahead of the Changes

Payday Super is coming. The businesses that thrive will be those that get ahead of the change rather than scrambling on 1 July 2026.

Want to discuss how this affects your specific situation? Get in touch with our team to ensure your business is ready for the transition.

This article provides general information and should not be relied upon as specific advice for your circumstances. For tailored guidance, speak with your Alexander Spencer adviser.