Payroll is About to Become More Complicated for Business Owners

The Change

The Quarterly System is Ending

If you employ staff, you already know the rhythm: pay super quarterly, lodge by the 28th day after the quarter ends, move on. That routine is about to disappear.

The Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill passed through parliament in November 2025, and with it came the single largest overhaul to superannuation payment obligations in decades. From 1 July 2026, the quarterly superannuation guarantee cycle will be replaced by what the government is calling Payday Super.

The concept is straightforward: every time you pay your employees, you will have seven business days to remit their superannuation to the correct fund. Not seven calendar days — seven business days, which still leaves very little margin for error when you factor in processing times, public holidays, and the realities of running a business.

This is not a minor administrative tweak. It fundamentally changes how payroll, cash flow, and compliance intersect for every employer in Australia.

New Terminology

Qualifying Earnings Replace Ordinary Time Earnings

Along with the new payment timeline comes a new calculation base. The familiar concept of Ordinary Time Earnings (OTE) is being retired in favour of a broader measure called Qualifying Earnings (QE).

QE is the new foundation for calculating the 12% superannuation guarantee, and it captures more than OTE ever did. It includes:

• All components previously classified as OTE
• All commissions, regardless of structure
• Directors' fees
• Any salary-sacrifice reductions
• Payments to contractors who are engaged primarily for their labour

Each payday now becomes a "QE day". The individual SG amount for that pay run is simply 12% multiplied by the Qualifying Earnings for that day. No more aggregating across the quarter and hoping it balances out.

The maximum super contributions base still applies, but it now operates as an annual limit rather than being assessed quarterly. This changes the maths considerably for high-earning employees, and it is something you need to track carefully across the full financial year.

"This is not a change you can afford to learn about on 2 July. Every employer needs a transition plan in place well before the start of the new financial year."

Compliance

The Penalties are Steep

Under the current quarterly system, a missed deadline is inconvenient but manageable. Under Payday Super, the consequences of even a single late payment are significantly more severe.

If super is not received by the employee's fund within those seven business days, the employer triggers the Superannuation Guarantee Charge (SGC). The redesigned SGC is composed of four elements:

1. Individual final SG shortfalls — the super that should have been paid but was not
2. Notional earnings component — interest calculated by daily compounding at the General Interest Charge (GIC) rate, representing the investment return the employee missed
3. Administrative uplift of 60% — a punitive loading applied on top of the shortfall amount
4. Choice loading — an additional charge if the employer failed to pay into the employee's chosen fund

That 60% administrative uplift is the number that should concern you the most. It can be reduced if you lodge a voluntary disclosure statement with the ATO before they issue an assessment — but only if you get in early. Once the ATO contacts you first, the full uplift applies.

Company directors should also note that unpaid SGC can result in personal liability through Director Penalty Notices. And unlike many business expenses, the GIC on unpaid SGC is not tax deductible. It is a pure cost with no offset.

Infrastructure

The Small Business Clearing House is Closing

Many small employers have relied on the government's free Small Business Super Clearing House (SBSCH) to process their quarterly super payments. That service is being discontinued.

If your business currently uses the SBSCH, you will need to transition to a commercial clearing house operator before 1 July 2026. This is not optional — the free service will simply stop accepting payments.

Beyond the clearing house itself, your payroll software and any Digital Service Providers (DSPs) you use need to be capable of processing super payments within the new seven-day window. If your current payroll system batches super quarterly and does not support per-pay-run processing, now is the time to have that conversation with your provider. Waiting until June will leave you scrambling.

Transition Risk

Watch Out for the June Quarter Transition

There is a timing trap built into the changeover that every employer needs to understand.

The June 2026 quarter (covering April, May, and June) is the final quarter under the old system. You still have until 28 July 2026 to pay that quarter's superannuation guarantee — that deadline has not changed.

But here is the problem: if you pay the June quarter SG after 1 July, that money arrives in the employee's super fund during the 2026–27 financial year. At the same time, you will also be making Payday Super contributions for every pay run from 1 July onwards. The result is a "bunching" effect where an employee receives both the old quarterly payment and the new per-payday contributions within the same financial year.

For many employees, particularly those on higher salaries or with salary sacrifice arrangements in place, this bunching could push their total concessional contributions above the expected $32,500 cap for 2026–27. Excess concessional contributions are taxed at the employee's marginal rate rather than the concessional 15%, which can create a significant and unexpected tax bill for your staff.

The government has indicated it is considering transitional measures to address this overlap, but as of March 2026, nothing has been legislated or confirmed. You cannot rely on a fix that does not yet exist.

What you can do right now is identify which employees are at risk. Anyone earning above $200,000, anyone with active salary sacrifice arrangements, and anyone already making voluntary contributions should be flagged. You may need to adjust the timing of your June quarter payment or coordinate with affected employees to pause voluntary contributions temporarily.

Action Plan

What You Should Do Now

You have roughly three months before Payday Super takes effect. That sounds like a reasonable amount of time, but the operational changes required are substantial. Here is where to start:

1. Talk to your accountant. If you do not already have a relationship with a firm that understands these changes, contact Hawkeye. We have been preparing our clients for this transition since the legislation passed.
2. Confirm your payroll provider can meet the seven-day requirement. Speak to your DSP or software provider and get written confirmation that their system will support per-pay-run super processing from 1 July.
3. Start paying super on payday now. You do not have to wait until July. Voluntarily aligning your super payments with each pay run now gives you three months to identify and fix any issues in your process before compliance becomes mandatory.
4. Review your cash flow. Moving from four large quarterly payments to a super payment every pay cycle is a significant shift in cash flow timing. Model this out and make sure your business can handle the more frequent outflows without strain.
5. Plan for the June quarter transition. Identify at-risk employees, consider paying the June quarter SG before 30 June if possible, and communicate with staff who have salary sacrifice arrangements.
6. Transition away from the Small Business Clearing House. If you currently use the SBSCH, select and onboard with a commercial clearing house provider well before the deadline.