Summary of the Payday Super Reforms

Last week the Government introduced the legislation (Treasury Laws Amendment (Payday Superannuation) Bill 2025) that introduces the new SG framework. The legislation is intended to:

• Align SG payments with pay days. Employers will need to ensure super contributions are received by the employee’s fund within 7 business days after each pay day (the “qualifying earnings day”).
• Apply from 1 July 2026 to SG contributions for earnings paid on or after that date.
• Replace the quarterly model, so SG will now accrue and be tested on each pay day rather than at the end of a quarter.

Under the new regime:

• Late or missing contributions will attract an SG charge including the shortfall amount, notional earnings, and an administrative uplift (60% of the shortfall, subject to remission).
• There are extended payment periods for new employees, employees changing funds, out-of-cycle payments (e.g. bonuses), or in exceptional circumstances such as system outages or natural disasters.
• Some definitions will change, for example, a single “qualifying earnings” base replaces the current “salary or wages” and “ordinary time earnings” distinction for SG calculations.

The ATO has issued a Practical Compliance Guideline (refer below) setting out how it will approach the first year of the new regime to support transition.

Summary of Draft PCG 2025/D5 – ATO’s First-Year Compliance Approach

The ATO’s draft Practical Compliance Guideline PCG 2025/D5 outlines how it will administer the new rules between 1 July 2026 and 30 June 2027 to assist employers who need time to update payroll systems and processes.

Consistent with the approach adopted by the ATO in recent years, compliance activity will be risk-based, focusing on employers who fail to make genuine efforts to comply.

ATO Risk Zones

Other key points to note from the PCG:

• Only applies for Qualifying Earnings Days from 1 July 2026 to 30 June 2027.
• From 1 July 2027, full compliance will be expected.
• Employers who correct honest errors “as soon as reasonably practicable” will remain in the low-risk category.
• There are examples in the PCG that highlight practical scenarios such as rejected payments, successor fund transfers, and payroll transition issues.

Preparing for this change

Please speak to your usual Vincents advisor to understand the implications and prepare accordingly.