Don’t Panic—but update your payroll settings

(Effective from 1 July 2026)

Paying super once a quarter used to feel like travelling through hyperspace with a mildly reliable navigation system. You’d send a large super payment every three months, hope it landed in the right fund, and occasionally deal with an ATO reminder that suggested it didn’t.

That era is ending.

With the introduction of Payday Superannuation, employers will soon need to pay super on the same day as salary and wages, and contributions must then arrive in each employee’s super fund within seven business days of payday.

This is one of the biggest payroll reforms in decades. It changes how employers run payroll, manage cash flow, and handle superannuation compliance. Quarterly super will become a thing of the past, and the penalties for missing the new timing will be sharper and easier for the ATO to enforce.

This guide explains the new rules, what employers must do, and how to prepare before the 1 July 2026 start date.

What Is Payday Superannuation?

Under the new reform, employers must:

1. Pay super on the same day as salary and wages.

Superannuation Guarantee (SG) must be calculated and paid each pay run, not quarterly.

2. Ensure the employee’s super fund receives the money within 7 business days of payday.

The clearing process must complete within seven business days.

According to the ATO’s official position:
“You must pay superannuation guarantee (SG) at the same time as salary and wages. SG contributions must generally arrive in employees’ funds within 7 business days of payday.”

Source: ATO Business Newsroom – Payday Super Legislation Introduced

This reflects the shift from delayed quarterly administration to near real-time superannuation.

Why the change?

The Government wants to:

• reduce unpaid and late super

• ensure employees actually receive their super in real time

• prevent delayed contributions

• support better retirement outcomes

• allow the ATO to detect non-payment instantly through STP

When Do the New Rules Start?

Start date: 1 July 2026

From this date, all employers must:

• pay super on payday, and

• ensure contributions are received by the fund within 7 business days.

Key transition details

Until then, the current quarterly SG system remains in place.

Employer Obligations Under Payday Super

From 1 July 2026, employers must:

1. Pay SG contributions on the same day as wages

Super is no longer a separate quarterly obligation. It must be processed in the same payroll cycle.

2. Ensure super funds receive the payment within 7 business days

The seven-day window applies to receipt by the fund, not just sending the payment.

Funds that receive contributions late will be visible through ATO data matching.

3. Fix rejected super contributions faster

The ATO has announced improved error messages from super funds to help employers understand:

• why a contribution was rejected

• what details were incorrect

• how to correct and resubmit the payment

4. Use stronger fund verification tools

New services, including the Member Verification Request (MVR), will allow employers to confirm:

• member details

• fund information

• account status

This will reduce rejected contributions and compliance failures.

Do Employers Need to Pay Super on the Same Day?

Yes — the new requirement is clear.

The ATO states employers must pay super on the same day as salary and wages.
This is the most important change and the biggest behavioural shift for small businesses.

What about the 7-day rule?

The seven-day rule applies to when the fund receives the money, not when the employer sends it.

Meaning:

• Day 0: You run payroll and pay super.

• By Day 7: The employee’s fund must show the contribution as received.

This applies even if:

• a clearing house sits in between

• the employee’s fund takes time to process

• banking delays occur

Employers will need clearing methods and payroll systems that meet this timeframe consistently.

Impact on Payroll Processes for SMEs

Small businesses with weekly or fortnightly payroll cycles will experience the most change.

Payroll software must support same-day super

Platforms like Xero, MYOB, QuickBooks, and KeyPay will need to:

• calculate SG each pay run

• submit contributions in real time

• integrate with fast-clearing super channels

• provide alerts for rejected contributions

Software updates will be rolled out across 2025–2026.

Clearing times must be monitored weekly

Old-style clearing systems (taking 3–5 days to process) may no longer be suitable.

A super contribution that “sits in transit” risks breaching the 7-day rule — and triggering SGC penalties.

Payroll approvals must be faster

Businesses will need to:

• finalise timesheets earlier

• approve payroll promptly

• ensure bank accounts are funded

• resolve rejected super errors quickly

Cash Flow Impacts for Small Businesses

Quarterly super allowed employers to hold SG liabilities for up to three months.

Under the new rules:

• super must be paid immediately, and

• cash leaves the business weekly or fortnightly

Businesses most affected include:

• hospitality

• medical practices

• construction / trades

• childcare

• retail

• professional services with large staff ratios

Penalties Under the New Law

Missing the 7-day receipt rule means you have not met your SG obligations.

If the super fund does not receive the contribution within 7 business days, you are liable for the SGC.

The Superannuation Guarantee Charge (SGC) includes:

• the SG shortfall

• 10% interest, calculated from payday

• $20 administration fee per employee per quarter

• the SGC cannot be claimed as a tax deduction

Rejected contributions also count as unpaid

If a super fund rejects a contribution because:

• the employee details were incorrect

• the fund account was closed

• the USI code changed

• the member number didn’t match

…the employer must:

1. correct the issue

2. resend the payment

3. ensure it still reaches the fund within the 7-day timeframe

This is why improved error messaging and the Member Verification Request service are critical.

What Employers Must Do Now (2025–2026)

1. Prepare payroll systems for same-day super

Confirm your payroll provider’s rollout timetable for payday super features.

2. Review your pay cycles

Weekly and fortnightly cycles will require the strongest discipline.

3. Update employee onboarding procedures

Ensure fund details are collected correctly to prevent rejected contributions.

4. Implement cash flow forecasting

Move super from a quarterly lump expense to a weekly or fortnightly outflow.

5. Train payroll staff

Teams must know how to handle:

• real-time SG payments

• rejected contributions

• ATO error messaging

• 7-day fund receipt rules

6. Speak with your accountant early

SMEs should not wait until mid-2026.
The transition will require:

• system changes

• process redesign

• cash flow planning

How 42 Advisory Supports Employers

42 Advisory helps SMEs transition to payday super by providing:

1. Payroll & Super Implementation

• setting up same-day SG payments

• integrating super clearing solutions

• configuring Xero/KeyPay for payday super

2. Cash Flow Modelling

• weekly/fortnightly payroll outflow analysis

• forecasting SG impact

• identifying working capital gaps

3. Process & Compliance Design

• payroll workflow redesign

• super verification tools

• rejected-contribution remediation

4. Monthly Compliance Monitoring

• payroll health checks

• STP alignment

• ensuring SG reaches funds within 7 days

With fixed-fee pricing, payroll compliance becomes predictable, structured, and low-risk.

Conclusion: Key Takeaways

• Employers must pay super on the same day as wages from 1 July 2026.

• Employees’ super funds must receive the money within 7 business days.

• Late or rejected contributions can trigger SGC penalties, which are non-deductible.

• SMEs must update payroll systems, processes, approvals, and cash flow management.

• Preparing early will avoid disruption and reduce compliance risk.

Or, to borrow from the Hitchhiker’s Guide:
Don’t panic — just start preparing your payroll systems now.

If you’d like 42 Advisory to help you transition to payday super, streamline payroll, or review your SG compliance, get in touch for a payroll readiness assessment.