Proposed Legislation and Practical Compliance Guideline (PCG) released for Payday Superannuation
From 1 July 2026, all Australian employers must pay superannuation contributions at the same time as employee wages — known as Payday Superannuation.
Main clarifications for employers in the proposed legislation and PCG
The requirement to pay super contributions within 7 days refers to business days not calendar days
Clear circumstances where the 7 business days requirement can be extended
A formula for a new Maximum Contribution Base (MCB) annual threshold
The transition to one 'Qualifying Earnings' base as opposed to the dual bases of 'OTE' and 'Salary and Wages'
The requirement to report qualified earnings and super contributions to the ATO through STP
The level of leniency the ATO will afford employers through the 2026/27 financial year
Key Concepts
Qualifying Earnings (QE)
QE are the amount of earnings an employee is paid on which individual SG amounts are calculated. This is a new term, which relies on and streamlines existing concepts such as OTE.
Qualifying earnings consists of:
OTE, which is an existing concept which does not change the substance of the provisions that define the scope of OTE, and this amount is calculated the same way as it was under the current SG framework for most employees;
amounts of OTE that have been sacrificed in exchange for an additional superannuation contribution under a salary sacrifice arrangement; and
payments that were expressly included within ‘salary or wages’ under the old law for arrangements that fall within the extended meaning of employee for the SGA Act.
Employers will need to report both QE and Super Liability via Single Touch Payroll (STP).
QE does not include certain payments that are currently excluded from OTE and/or ‘salary or wages’ under the old law. Some exclusions that were previously in the SGA Act will be moved into the regulations to consolidate all exclusions into the one place.
QE Day
The day on which the employer makes a payment of QE to or for the employee.
Key Changes
Super must be paid with each pay cycle. Contributions must reach the employee's fund within 7 business days after payday.
Super Guarantee Payment Timeframes
Normal Circumstances: Superannuation contributions must be paid within 7 business days of each payday.
New Employees or Funds: If an employee starts a new job or changes their super fund, first-time payments must be received by the fund by the end of the 20th business day after each payday.
Out-of-Cycle or Bonus Payments: These payments can be included in the next regular pay cycle's superannuation contributions. This does not apply when the employee has terminated and no future Qualifying Earnings payments will be made.
Exceptional Circumstances: The ATO may extend timeframes for events such as natural disasters or system outages.
Bunching Rules: Where the period for making contributions for a QE day is extended to a longer period than the usual period, a 'bunching rule' applies to contributions relevant to the later QE day(s).
One Earnings Base
One earnings base referred to as 'Qualifying Earnings' will replace the dual “salary or wages” vs “OTE” model. One qualifying-earnings base will simplify administration.
Salary Sacrifice
Amounts salary sacrificed to a superannuation fund count toward qualifying earnings and cannot offset required SG.
Maximum Contributions Base (MCB)
How the Maximum Contribution Base will be calculated
The maximum contributions base will now be an annual limit, as opposed to quarterly.
MCB = (Concessional Cap x 100 divided the current SG rate)
Using current year figures the annual MCB earnings would be $250,000. That is $30,000 x 100 divided by twelve.
Once exceeded by the employer in a financial year, further qualifying earnings are treated as nil for SG purposes.
Treatment of exemption certificates
Employer exemption certificates (for high income earners who have breached the MCB due to multiple employment) can be applied for where certain conditions are met.
Examples of when an employee may apply for the exemption certificate is if they have moved employers part way through the year, or they have two concurrent employers.
Penalties for Non-Compliance
Late or missed contributions create a Superannuation Guarantee Charge (SGC) liability with interest and penalties.
Administrative uplift: 60 % of unpaid amounts (may be reduced by regulation).
Late-payment penalties: 25% – 50% of outstanding charge if not paid within 28 days of notice
Additional ATO penalties: up to 200 % for repeated or unreported breaches.
Voluntary Disclosure: Lodging a disclosure before ATO assessment may reduce penalties
The ATO’s 2026/27 approach focuses on education and support while employers' transition.
Risk Zones
Low risk: Super paid with wages; small delays corrected quickly; no unpaid super.
Medium risk: Employer continues quarterly payments, but all super paid within 28 days after the quarter end (that is, employers continue to adhere to the quarterly payment regime).
High risk: Insufficient or late super; miscalculations; unpaid employees.
Key Points for Compliance
ATO will be lenient only in 2026/27 for genuine compliance efforts.
Low-risk periods will not be reviewed.
Employers may shift risk levels.
From 1 July 2027, full enforcement applies.
Employers should fix rejected or delayed payments quickly.
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