Payday Super: Compliance, extensions, and penalties
Payday Super changes how you pay superannuation contributions to your employees. Under the new law, superannuation guarantee (SG) contributions must be paid into an employee’s super fund within 7 business days of the employee’s salary and wages being paid.
The change also brings new compliance rules, extensions, and penalties for non-compliance. Businesses need to be aware of these changes to avoid non-compliance and a fine from the ATO.
Payday Super Compliance Rules
To comply with the new laws, there are a few facts you need to be aware of.
Explaining what Qualifying Earnings are for businesses
Your employees’ superannuation guarantee contributions need to be in their super fund within 7 business days of qualifying earnings (QE). QE events are the dates on which you pay salary and wages for work performed by your employees. It’s what the workers earn on the job, and the QE event is when you pay them either weekly, fortnightly, or monthly.
To put this in perspective: An employer pays their employees fortnightly. The next date on which they pay salary and wages (QE event) is the 1st April 2026. Under Payday Super rules, the SG contribution calculated on the employees’ QE is due into their super funds by the 10th April (7 business days later).
What needs to be reported
In addition to what is already reported in single touch payroll (STP), the ATO needs businesses to report qualifying earnings and superannuation liabilities. The super liability is the owed super calculated based on QE.
If you do not report these amounts in your STP submissions, you do not comply with the Payday Super law. To do this, you need payroll software that can report these amounts accurately in your STP submissions.
How to stay compliant with your SG contributions
Businesses need payroll software that can report QE and the SG contribution liability payments. They will also need a super clearing house (SCH) to distribute SG payments to their employees’ nominated super funds.
You can’t just pay the contribution directly into a super fund: this is where a super clearing house keeps you compliant by transmitting SuperStream data (super fund information and the SG payment) to the designated super fund.
If there is a mistake with an SG contribution, the super fund provider you sent the payment to has 3 business days to return it to you for corrections.
Payday Super deadline extensions
There are a few exemptions to Payday Super that allow you to extend the 7-business-day deadline for SG contributions after a QE event.
You are provided an extension under any of these circumstances.
- New employees or a new super fund nomination by an employee
- Out-of-cycle payments
- Special circumstances
- Overlapping extensions
None of these removes your obligation to pay super contributions: they just give you more time to meet your commitments.
New employees or a new super fund nomination by an employee
If you have a new employee or an employee who has changed super funds, your business has 20 business days from the relevant qualifying earnings (QE) day to make the payment.
This allows you time to adjust to the additional administrative duties involved in adding/changing a super fund in your system.
Out-of-cycle payments
Out-of-cycle payments are earnings that occur outside of regular QE events — the most common example is a bonus (monthly/quarterly/yearly). These are earnings defined as qualifying earnings but paid irregularly. When these earnings are paid, the super contribution calculated from them must be paid at the next QE event.
For example, let’s say you pay your employees their normal salary and wages on the 1st of every month, but you pay a quarterly bonus/commission on the 10th. The super contribution calculated from that bonus/commission will need to be paid out on the 1st of the next month, alongside the regular QE event.
Special circumstances
Under certain circumstances, the ATO may grant an extension of the Payday Super deadline. These circumstances could include natural disasters, such as floods or bushfires, that adversely affect how you conduct your business.
If you have provided an extension on special circumstance grounds, you have before the later of 20 business days to make the SG contribution from:
- The affected QE event date.
- Determination date provided by the ATO.
Overlapping extensions
When an extension is given, there is a chance that it will conflict with your next QE event. If this occurs, the extension due date supercedes any superannuation contribution deadline that falls before it.
Meaning, if you pay salary and wages and the super deadline for that event occurs before an extension due date you were given for a previous salary and wages event (QE), the extension due date is the deadline for both super contributions.
In-depth example
Business pays fortnightly. On 1st April, they pay their employee’s salary and wages for the first time (1st QE event).
They receive a 20-business-day extension to pay the superannuation (SG) contribution for the first QE event. The extension date is the 29th April.
Their next QE event is on the 15th. The SG due date for the 2nd QE is the 24th April.
Because this falls before the extension date (overlapping), both the SG contributions for the 1st QE and 2nd QE event are due on the 29th April.
Payday Super Penalties
The penalty for missing, late, and or underpaid super contributions is the superannuation guarantee charge (SGC). The SGC is made up of 4 components of QE:
- The total of your individual final SG shortfalls
- Notional earnings (interest charged on the shortfall)
- Administrative uplift (60% of the SG shortfall and sum of all notional earnings)
- Total choice loading (25% or 50% of SG shortfall) if applicable
If the super contribution is missing, late, or incorrect, you will receive a letter from the ATO requesting payment of SGC. If you don’t pay within 28 days, you are subject to a late fee which is 25% of the SGC. This increases to 50% of the SGC for unpaid penalties.
For specific information, check out the ATO’s penalties page.
Staying compliant with Payday Super
Payday Super marks a big change in how businesses pay employees. This major update will come with growing pains, so it is important to start thinking about how to stay compliant now, rather than on 1 July 2026, when Payday Super takes effect. Don’t get caught out, and complete our Payday Super checklist to prepare your small business.
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