Payday Super: Frequently Asked Questions

With Payday Super set to commence on 1 July 2026, many employers are undertaking compliance reviews and preparing to update processes and governance frameworks. The ATO has also been busy releasing guidance to assist employers with the transition to the new rules.

Below, we address some of the key questions employers have raised so far.

1. Have there been further changes to the legislative framework or commencement date?

No. The Treasury Laws Amendment (Payday Superannuation) Bill 2025 was introduced on 9 October 2025 and received Royal Assent as the Treasury Laws Amendment (Payday Superannuation) Act 2025. The commencement date remains 1 July 2026.

For a summary of the framework, please see Payday Super is finally here. Are you ready?

2. What guidance have the regulators provided?

ATO

The ATO has released extensive guidance materials, including factsheets and changeover guidance. On 18 March 2026, it published four draft Law Companion Rulings (LCRs), which provide detailed interpretive guidance on the new framework. These rulings are proposed to apply from 1 July 2026.

The ATO also finalised PCG 2026/1 on 28 January 2026 (previously released as draft PCG 2025/D5, which we discussed in Payday Super is finally here. Are you ready?). The finalised guideline confirms the risk-rated compliance framework (low, medium or high) for the first year of Payday Super (1 July 2026 to 30 June 2027). While the ATO will adopt a facilitative approach for minor errors in the implementation year, it has indicated a firmer stance on serious or deliberate cases of non-compliance, including employers not attempting to pay SG for each payday.

Fair Work Ombudsman

As the ATO is the primary enforcement agency for the compulsory super guarantee (and therefore the new Payday Super rules), guidance from the FWO has been less extensive, largely referring employers to the ATO's resources.  

However, in a release first published late last year and updated more recently, the FWO has put employers on notice that failure to make payment of super in accordance with the new rules may breach the Fair Work Act 2009 or an applicable award or enterprise agreement. Failure to comply with the reforms may invite potential scrutiny from the FWO, exposure to civil penalties and the risk of claims from employees.

3. Can offsetting of SG shortfalls still apply under the new rules?

Yes, but the timing has changed and must now be assessed on a per-payday basis. The quarterly "top-up" mechanism is no longer available.

Key points:

• On-time and late contributions are applied automatically under the statutory ordering rules to the earliest outstanding QE day first, in the order received by the fund. Employers cannot allocate contributions to specific QE days;

• Late contributions can reduce the SGC before the Commissioner issues an assessment, but cannot reduce it to nil (notional earnings and the administrative uplift remain payable). Late payment offsets (LPOs) can no longer be allocated to pre-1 July 2026 periods; and

• Prepayments remain available. Excess contributions from prior pay periods (received within the 12 months before the current QE day) carry forward automatically.

Note: For the final June quarter 2026 payment, LPO will no longer be available.

4. Do we need to review our existing pay code classifications?

Yes. QE replaces OTE as the single earnings base for calculating both the SG amount and the SGC. While QE is largely aligned with OTE, there are three key differences:

• All commissions paid to an employee are QE, including commissions solely for work performed entirely outside ordinary hours (which were previously excluded from OTE);

• Amounts paid to an employee that would be QE but have instead been salary sacrificed to superannuation are included in QE. This ensures that employers cannot reduce their SG obligations through salary sacrifice arrangements where the sacrificed amounts relate to what would otherwise be QE; and

• Earnings paid to workers who fall under the expanded definition of employee for SG purposes are QE, eg. payments to independent contractors paid wholly or principally for their labour.

The latter two are clarifications of the existing law brought explicitly within the new QE definition.

Even if your organisation does not make these types of payments, best practice is to conduct a pay code review every four years or less for employment-related obligations (eg. SG, PAYG, STP and payroll tax). This aligns with tax and super-related record keeping periods and amendment periods. For SG shortfalls, historical errors will carry forward and will require rectification under both the existing and new laws.

From 1 July 2026, employers must report both QE and super liability in STP, replacing the current requirement to report either OTE or super liability. Employers should review their STP software and map pay codes now to meet reporting obligations. STP reports that do not include both amounts by 1 July 2027 will be rejected.

5. If we make an error, how can we fix it?

Errors from 1 July 2026 onwards

The pathway under the new framework (draft LCR 2026/D3) depends on the nature and timing of the error:

Before the ATO issues an assessment or estimate

• Late contributions can reduce the SGC, but cannot reduce it to nil.

• Employers should lodge a voluntary disclosure to reduce the administrative uplift component, which will be set at 60% of the shortfall. Reductions are based on timing of the disclosure and compliance as follows:

  • 40% reduction if made within 30 days after QE day;

  • 35% reduction if made between 31 and 60 days;

  • 30% reduction if made between 61 and 120 days;

  • 15% reduction if made more than 120 days after QE day;

  • Further 20% reduction if there have been no prior assessments in the 24 months before the QE day.

• As these reductions are cumulative, an employer who discloses within 30 days and has no prior assessments can access a full reduction of the administrative component.

After the ATO issues an assessment or estimate

• The Commissioner can issue assessments at any time, based on a voluntary disclosure, on the ATO's initiative using STP and super fund data sources, or on an employee notification.

• For future QE days, voluntary disclosures can still reduce the administrative uplift to 40% (rather than 60%) where there has been no prior Commissioner-initiated assessment in the 24 months ending on the QE day that are still in force on that day. If there is an assessment in force on the QE day, then no reduction is available.

First year compliance approach (PCG 2026/1)

• Employers who start paying super on payday from 1 July 2026 but experience occasional late payments (eg. due to incorrect details or rejected funds that are fixed promptly) are likely to be classified as "low risk" and will not be the focus of ATO compliance action during the first year.

Errors relating to pre 1 July 2026 periods

The existing process applies. Employers must self-assess the SGC, lodge an SG statement as a voluntary disclosure and pay the SGC to the ATO. Late payment offsets remain available for this period.

Regardless of the period, employers may also need to consider disclosures to State Revenue Offices (in respect of payroll tax implications) and the Fair Work Ombudsman (as superannuation is now regulated under the National Employment Standards).

Get in touch with our Tax and Workplace Relations, Employment and Safety teams if you require assistance with any of the above.