ATO tightens superannuation compliance with Payday Super
The Australian Taxation Office (ATO) will implement Payday Super from 1 July 2026, requiring employers to pay superannuation each pay cycle, tightening compliance for both local and international businesses.
By Ro Elvinia
Since the rollout of Single Touch Payroll in 2018, the ATO advances its most significant payroll reform. Under the new Payday Super regime, employers will be mandated to pay Superannuation Guarantee (SG) contributions each pay cycle (either weekly, fortnightly or monthly), rather than quarterly, beginning 1 July 2026.
The reform improves transparency and ensures employees receive their entitlements promptly. Employees will now be able to check SG contributions after every payday, instead of waiting up to four months. The ATO expects this change to increase employee-initiated reports of non-compliance to both the ATO and the Fair Work Ombudsman, a newly designated channel for SG-related complaints.
On 9 October 2025, Parliament introduced the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and the Superannuation Guarantee Charge Amendment Bill 2025 to give effect to the reform. Treasurer Jim Chalmers emphasised that while most employers meet their obligations, a minority exploit their employees, classifying unpaid superannuation as a form of wage theft. The move follows the criminalisation of wage theft that took effect on 1 January 2025.
Key changes
The latest Bills introduced several adjustments from earlier drafts, including:
- Employers must make SG contributions within seven business days of each payday (previously seven calendar days).
- Contributions to new employees’ funds must be made within 20 business days (previously 21 calendar days).
- Penalty assessments may be reduced to nil in cases of exceptional circumstances.
- Late payment offsets for SG contributions will no longer be available after 1 July 2026.
This means that paying SG late, before an ATO Superannuation Guarantee Charge assessment, no longer reduces penalties, making timely contributions essential.
Compliance framework
The ATO will adopt a risk-based approach to enforcement, categorising employers as low, medium, or high risk. Between 1 July 2026 and 30 June 2027, a one-year grace period will apply for low-risk employers, with more rigorous compliance action beginning in July 2027.
- Low risk: Employers who make genuine efforts to pay on time, even with minor delays.
- Medium risk: Employers with shortfalls resolved within 28 days after quarter-end.
- High risk: Employers with unpaid SG contributions beyond this timeframe, prioritised for investigation.
Implications for international businesses
For international companies operating in Australia, or those planning to enter the market, Payday Super significantly tightens payroll compliance requirements. Businesses must align pay cycles, payroll systems, and reporting processes with the new SG payment schedule to avoid penalties and maintain their reputation with regulators.
Many of ABN Australia’s international clients already rely on our firm’s tax and accounting services to manage payroll, superannuation, and corporate obligations. With Payday Super approaching, ensuring compliance will require even closer integration between accounting and payroll functions.
At ABN Australia, we continue to assist global businesses in navigating these regulatory shifts, maintaining compliance, and building sustainable operations in Australia’s evolving business landscape. To ensure your business is prepared for Payday Super, contact ABN Australia’s tax and accounting team today to review your payroll systems and compliance readiness ahead of the 1 July 2026 rollout.
Published: 29th Oct 2025 | Last updated: 29th Oct 2025
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