One of the most significant changes to the Australian superannuation system in decades has now commenced. From 1 July 2026, Payday Super requires employers to ensure super contributions reach employee super funds within seven business days of each payday. For many businesses, this represents a major shift from a quarterly payment cycle to a more frequent, real-time obligation.
While the Government is aiming to get super into employee accounts faster and help close the national super gap, the new system introduces new compliance, cash flow and administrative considerations for employers. Businesses that have prepared well should find the transition manageable, but those still relying on quarterly processes need to act quickly to avoid significant problems.
What Exactly Has Changed?
Under the previous rules, employers generally had until 28 days after the end of each quarter to make super contributions. Under Payday Super, the clock now starts on each “Qualifying Earnings” (QE) day — essentially your payday for salary, wages, commissions, bonuses and certain contractor payments.
Key Requirements
- Contributions must be received and allocated to the employee’s fund within 7 business days of payday (there are limited exceptions to this).
- Shortfalls are now calculated per QE day rather than quarterly.
- The ATO’s Small Business Superannuation Clearing House has closed, meaning businesses previously using the service must now use a SuperStream-compliant alternative.
Penalties are also tougher. The administrative uplift can reach 60% of the shortfall (with reductions available for early voluntary disclosure), although the Superannuation Guarantee Charge itself is deductible in more circumstances.
The ATO’s first-year compliance approach (PCG 2026/1) adopts a risk-based view, with businesses that make genuine efforts to comply and promptly rectify mistakes generally treated as lower risk. However, if an employee reports a problem to the ATO then don’t expect the ATO to ignore this.
Managing the June – July Changeover
There is a technical quirk in the rules which could catch out unsuspecting employers, especially when it comes to SG contributions made across the month of July 2026.
If a business has paid employees during the June 2026 quarter then the SG deadline for this quarter would normally be 28 July 2026. However, many employers have decided to pay the SG amount for the June quarter before this deadline to reduce the risk of accidentally triggering a SGC problem.
This is because any SG contributions made from 1 July 2026 will reduce the super owing for the June quarter first, before any remaining amount is used to meet Payday Super obligations relating to pay runs that occur in July.
The best way to manage this situation to avoid SGC liabilities really depends on the dates of any July pay runs. Please contact us if you need help identifying any potential problems or to help come up with a practical solution.
Three Practical Steps to Take Now
- Review Your Systems: Confirm that your payroll software, clearing house and internal processes are operating correctly under the new rules. If you have not already done so, review pay codes and contribution workflows to ensure QEs are correctly identified.
- Monitor Cash Flow and Processes: Assess the impact of more frequent super payments on cash flow. Review approval processes, onboarding procedures and the handling of bonuses or out-of-cycle payments.
- Strengthen Controls and Communication: Ensure payroll and finance teams understand the new requirements and have appropriate controls in place. Ongoing monitoring and periodic reviews will help identify issues before they become compliance problems.
The interdependencies between payroll systems, clearing houses and super funds mean small oversights can quickly create larger compliance issues. Businesses that continue to monitor and refine their processes will be best placed to meet their obligations.
At Khourys & Associates, we are helping clients navigate the practical implications of Payday Super through readiness reviews, payroll process assessments and cash flow planning. Our goal is to help businesses remain compliant while building stronger and more efficient systems.
If you would like to discuss how Payday Super affects your business, contact your [Your Firm Name] adviser. We can help identify any remaining gaps and ensure your systems and processes continue to operate effectively under the new system.
ATO Cracks Down on Personal Services Income Arrangements: Is Your Business at Risk?
The ATO is sharpening its focus on how taxpayers generating income from personal services deal with that income for tax purposes. In a recent Spotlight bulletin, Small Business Assistant Commissioner Tony Poulakis highlighted the release of Practical Compliance Guideline PCG 2025/5.
This guideline clarifies the ATO’s compliance approach to the “alienation” of personal services income (PSI) — essentially, arrangements which involve routing income earned through your personal skills and efforts via a company or trust, rather than receiving it directly.
Why the ATO Is Interested
Many business owners operate through a company or trust rather than earning income personally. In many cases this is entirely legitimate and provides commercial benefits such as asset protection, flexibility and succession planning.
However, where income is generated primarily from the efforts, skills or reputation of one individual, the ATO is concerned about arrangements that divert income away from that individual in order to reduce tax.
Even where a business is able to pass certain tests to be classified as a Personal Services Business (PSB) under the tax rules and falls outside the strict PSI attribution rules, the ATO has made it clear that general anti-avoidance provisions in Part IVA can apply if the arrangement is primarily tax-driven. If Part IVA applies then this can lead to higher tax liabilities as well as significant penalties and interest charges.
What Does the ATO Consider Low Risk?
The ATO’s guidance focuses heavily on whether the individual generating the income receives an appropriate share of the profits.
Generally, an arrangement is more likely to be considered low risk where:
- The individual who performs the work receives most of the economic benefit through salary, wages, bonuses, director fees or trust distributions.
- Profits retained in a company are kept for genuine and short-term business reasons.
- Family members or associates are only paid reasonable amounts for genuine work performed.
For example, retaining profits in a company to fund the purchase of new equipment in the short-term could be viewed favourably if there is evidence supporting those plans and the company actually follows through with these plans.
What Will Attract ATO Attention?
The ATO has specifically identified a number of higher-risk behaviours, including:
- Splitting income with family members who have made little or no contribution to earning that income.
- Retaining substantial profits in a company without a genuine short-term commercial purpose.
- Directing profits generating from someone’s personal services to entities or beneficiaries primarily because they are taxed at lower rates or because they have tax losses.
The ATO’s expectations in this area are very strict. The greater the mismatch between who performed the work and who is ultimately taxed on the profits from that work, the greater the likelihood of ATO scrutiny.
A Limited Opportunity to Review Existing Arrangements
The ATO has provided a transition period for taxpayers who genuinely review and adjust their arrangements.
Businesses that take genuine steps to move from higher-risk arrangements to lower-risk arrangements by 30 June 2027 are unlikely to face Part IVA action in relation to those arrangements if reviewed by the ATO.
This is not an amnesty, but it is an opportunity for business owners to proactively assess their position and make changes where necessary.
What Should Business Owners Do?
Now is an ideal time to review how profits are being distributed within your structure.
Questions worth considering include:
- Are retained profits supported by documented short-term commercial reasons?
- Are payments to family members commercially justifiable?
- Would your arrangements withstand ATO scrutiny if reviewed?
If you operate through a company or trust and derive income largely from your personal skills or efforts, it is important to review existing arrangements in light of the ATO’s updated guidance. A proactive review today may prevent costly issues tomorrow.