For decades, superannuation was a quarterly problem. You accrued it, you reconciled it, and you paid it within 28 days of the quarter’s end. From 1 July 2026 that model is gone.
Superannuation is now a pay-cycle obligation: contributions must be received by the employee’s fund within seven business days of payday. Miss it — even by a day, even by a small amount — and you are exposed to a superannuation guarantee charge that is deliberately punitive, and to personal liability for your directors.
What’s the real issue?
The real issue is not the rate. The rate is still 12 per cent. The issue is timing, frequency and the definition of what super is calculated on — and the fact that a compliance error you used to catch in a quarterly reconciliation now compounds every single pay run.
Three things changed at once:
- The deadline moved from quarterly to seven business days after each payday.
- The penalty regime was rebuilt, with interest that compounds daily and an administrative uplift on top of the shortfall.
- The calculation base changed, from ordinary time earnings alone to a broader concept of qualifying earnings.
Most employers we speak to have addressed the first and not the third. That is where the exposure sits.
What this looks like in practice
An anonymised composite, not a real client.
A mid-sized Queensland services organisation pays fortnightly and uses a clearing house. Its payroll team dutifully updated the schedule so that super is remitted on the same day as wages. Leadership considered payday super “done”.
Three problems surfaced in the first quarter:
- The clearing house lag. Funds were being sent on payday but not received by every fund inside seven business days — one fund consistently took nine. The obligation is receipt, not despatch.
- Commissions and bonuses. Sales staff received quarterly commissions processed off-cycle. Nobody had treated them as attracting super, and under the new rules commissions form part of qualifying earnings.
- Salary sacrifice. Super had been calculated on post-sacrifice gross rather than the pre-sacrifice amount — a long-standing error that a quarterly cycle had masked and a fortnightly cycle exposed 26 times a year.
None of it was deliberate. All of it was chargeable.
What does the law say — and how must it be applied?
The reforms sit in the Treasury Laws Amendment (Payday Superannuation) Act 2025 (Cth) and the Superannuation Guarantee Charge Amendment Act 2025 (Cth), and apply from 1 July 2026.
- Seven business days, measured on receipt
Contributions must be received by the employee’s superannuation fund within seven business days of the qualifying earnings day — in practice, payday. If you pay weekly, you pay super weekly. If you pay fortnightly, fortnightly. Limited exceptions apply, including for new employees and certain out-of-cycle payments, but the default is unforgiving. Because the test is receipt, the performance of your clearing house, your fund’s processing time and even a public holiday are now your compliance risk.
- Qualifying earnings, not just ordinary time earnings
The charge is calculated on qualifying earnings, a broader base that captures ordinary time earnings plus items including all commissions and the amount of any salary sacrificed into superannuation. The practical effect is that several long-standing grey areas are no longer grey.
Commonly included: payments for ordinary hours; commissions (however labelled — bonus, incentive, ex gratia — where they relate to ordinary hours); casual loading; shift penalties and public holiday payments; paid leave taken; cashed-out leave; directors’ fees; and many allowances, including task allowances such as higher duties, supervisor, danger and retention allowances.
Commonly excluded: overtime; annual leave loading referable to a lost opportunity to work overtime; employer and government paid parental leave; and bonuses or commissions relating solely to work performed entirely outside ordinary hours.
- The charge is designed to hurt
If contributions are not received in time, the superannuation guarantee charge (SGC) applies. It is assessed by the ATO, calculated on qualifying earnings, and includes interest compounding daily at the general interest charge rate plus an administrative uplift of up to 60 per cent of the shortfall. Additional penalties of 25 or 50 per cent of the unpaid charge can apply.
One point of relief: from 1 July 2026 the SG shortfall component is tax deductible (it previously was not). Interest and late-payment penalties remain non-deductible.
- Your directors are personally on the hook
SGC is a director penalty notice liability under Division 269 of Schedule 1 to the Taxation Administration Act 1953 (Cth), alongside PAYG withholding and GST. If the company does not pay, current and former directors can be made personally liable. Where lodgements are more than three months overdue, a lockdown notice can issue — and the only way out is to cause the company to pay.
- The ATO can see it
Single Touch Payroll reporting, matched against fund receipt data, gives the ATO near-real-time visibility of both what you owed and when it landed. This is not a regime that relies on self-reporting a problem at year end.
What are the risks and pain points for employers?
- Cash flow. The quarterly float many organisations quietly relied on has disappeared. Twenty-six super payments a year instead of four changes your working capital profile.
- Timing risk you don’t control. Clearing houses, fund processing times, public holidays and rejected contributions (wrong member number, closed account) all sit between you and the seven-day deadline.
- Errors that now repeat. A misclassified allowance or an overlooked commission used to be one quarterly error. It is now an error in every pay period, each with its own interest clock.
- Contractor misclassification surfaces faster. If a contractor is in truth an employee — or caught by the extended definition — the shortfall now accrues every cycle rather than quarterly.
- Off-cycle payments. Bonuses, commissions, termination payments and back-pay processed outside the normal run are where we expect the most breaches.
- Historical shortfalls. Any pre-existing underpayment is now assessed under a harsher framework. The window for quiet correction is closing.
- Director exposure. Officers who assume super is a payroll administration matter are carrying personal liability they may not have priced.
Our top five tips: what every employer should do
- Test receipt, not despatch — and get the evidence. Ask your payroll provider and clearing house, in writing, to confirm typical fund receipt times, and then verify against actual fund confirmations for a sample of employees across several funds. Build a buffer into your payment date so that a slow fund or a long weekend does not create a shortfall. If a contribution is rejected, you need a process that catches it in days, not months.
- Re-map your earnings codes against qualifying earnings. Go through every pay code — allowances, commissions, bonuses, loadings, leave types, termination components — and confirm whether it attracts super under the new base. Pay particular attention to the four areas where we see the most confusion: commissions and incentives; allowances misclassified as reimbursements; discretionary or ex gratia bonuses relating to ordinary hours; and salary sacrifice, where super must be calculated on the pre-sacrifice gross amount.
- Fix historical shortfalls now, deliberately and with advice. If your review turns up a past underpayment — and most reviews do — deal with it as a project rather than a discovery. Quantify the exposure, understand the interaction with payroll tax (remediation payments have their own timing rules), and take advice on voluntary disclosure before the ATO’s data matching finds it for you.
- Rehearse the off-cycle payment. Decide in advance how bonuses, commissions, back-pay, termination payments and out-of-cycle corrections will be handled, who signs off, and how the seven-day clock is tracked for each. This is the single most likely source of an inadvertent breach.
- Put superannuation on the officer agenda, not just the payroll agenda. Because SGC carries director penalty notice exposure, this belongs in board and executive reporting. Ask for a standing report on contributions paid on time, contributions rejected and reprocessed, and any known shortfall. Officers exercising due diligence should be able to answer the question “are we paying super on time, every time?” with data, not assurance.
Frequently asked questions
When exactly is super due now?
Contributions must be received by the employee’s fund within seven business days of payday. Because the test is receipt rather than payment, you should be initiating payment early enough to allow for clearing house and fund processing time.
Has the superannuation guarantee rate changed?
No. It remains 12 per cent. What has changed is the timing, the frequency and the earnings base the contribution is calculated on.
What are “qualifying earnings”?
A broader base than ordinary time earnings, used to calculate both contributions and the superannuation guarantee charge. It captures ordinary time earnings plus items including all commissions and amounts salary sacrificed into superannuation. Overtime remains outside it.
Do I pay super on overtime?
Generally no — overtime is not ordinary time earnings. But be careful: where hours described as overtime are in truth part of an employee’s ordinary hours under their award or agreement, or where an award defines ordinary hours differently from your assumption, the answer can change. This is a common source of error.
Do I pay super on bonuses and commissions?
Usually yes, where they relate to work performed during ordinary hours — and the label makes no difference. A payment described as a discretionary bonus, incentive or ex gratia amount can still attract super. Bonuses relating solely to work performed entirely outside ordinary hours are treated differently.
How is super calculated where an employee salary sacrifices?
On the pre-sacrifice amount. You cannot reduce your superannuation guarantee obligation by reference to what an employee has chosen to sacrifice into super.
What happens if we are late by one day?
The superannuation guarantee charge can apply. It is assessed on qualifying earnings, includes daily compounding interest and an administrative uplift of up to 60 per cent of the shortfall, with further penalties possible. There is no de minimis grace period, which is why the buffer in your payment timing matters so much.
Can our directors be made personally liable for unpaid super?
Yes. The superannuation guarantee charge is subject to the director penalty notice regime, which reaches current and former directors. Where lodgements are more than three months late, a lockdown notice leaves payment as the only way to avoid personal liability.
We’re a small council or not-for-profit — does this apply to us?
Yes. Payday super applies to all employers regardless of size or sector. Smaller organisations with lean payroll functions and manual processes generally carry the most timing risk.
How Harrisons can help
Get payday super wrong and the cost is not a rounding error: a shortfall in every pay period, interest compounding daily, an administrative uplift of up to 60 per cent, non-deductible penalties and personal exposure for your directors. Get it right and it is simply a process that runs.
We help Australian employers — SME business owners, Queensland local government councils, and community and not-for-profit organisations — make that shift properly:
- Audit your pay codes and earnings base against qualifying earnings, so the right amount is calculated in the first place.
- Stress-test your payment timing so contributions are received, not merely sent, inside seven business days.
- Quantify and remediate historical shortfalls — including the payroll tax consequences — before the ATO raises them.
- Build officer-level reporting so your directors can discharge their due diligence duty on superannuation.
Don’t let a seven-day deadline become a five-year problem. Get in touch with our team today and start with a payday super and pay-code readiness review.
This article provides general information for Australian employers and is not legal advice, and does not constitute taxation advice. Workplace and taxation laws change and how they apply depends on your specific circumstances. For advice tailored to your organisation, contact Harrisons.
Claire Harrison is the Founder and Managing Director of Harrisons, a flourishing HR consulting business that sprouted in 2009 from Claire’s passionate belief that inspiring leaders and superstar employees are the key success factor to any business. With over 20 years’ experience, Claire has worked as a HR Director of multi-national organisations, as a Non-Executive Board Director, and a small business owner. Claire’s corporate career includes working with companies such as BHP, Westpac, Fonterra and Mayne Nickless.
