Australia’s superannuation system is set for a big change. By July 1, 2026, employers will no longer make quarterly super guarantee (SG) payments.
Instead, they must pay super at the same time as wages—whether weekly, fortnightly, or monthly. The government’s new “payday super” plan, announced in draft legislation last Friday, requires employers to deposit super into workers’ accounts within seven days of payday. The goal is to help workers grow their retirement savings faster and ensure employers pay on time. However, the Council of Small Business Organisations Australia (COSBOA) warns that small and medium-sized businesses (SMEs) are not ready for such a quick transition.
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For SMEs, the new rule could create cashflow problems. Instead of setting aside super every three months, businesses must now find the money every week or fortnight. A retail shop with tight margins, for example, may struggle to cover extra costs on short notice. If they miss a payment, the penalty could be steep—a $600 fine on a $1,000 underpayment, far higher than today’s $20 fine. Worse, if a payment fails due to banking errors, businesses must fix it within seven days or still face penalties, even if the delay was beyond their control.
The benefits of Payday Super
For workers, this change is a big win. Getting super payments more often means they can start earning interest sooner, helping their savings grow over time. To make sure employers follow the rules, the government is introducing strict penalties. Businesses that underpay super will face a 60% penalty (compared to the current $20 fine per employee), daily interest charges, and additional fines of up to 50% for repeat offenders. The Super Guarantee Charge (SGC) will be tax-deductible, but penalties will not. Assistant Treasurer Stephen Jones describes it as a simpler system that will help workers retire with dignity.
COSBOA supports the idea but says businesses need more time. “We support the principle of Payday Super and timely superannuation payments for employees,” says COSBOA Chair Matthew Addison. “However, we urge the government to allow more time to ensure businesses are ready before enforcing a strict seven-day rule.” Addison points out that super payments go through multiple banking and processing steps before reaching super funds. Right now, payments can take several days to clear, and businesses need extra time to fix errors. A gradual rollout would help businesses adjust without causing problems.
The challenge for small businesses
Technology is another issue. Payroll systems need upgrades, which could take 18 to 36 months to complete. Meanwhile, super funds, which currently have 28 days to process payments, will only have three. This could lead to payment failures rising from 1.5 million to 25 million per year. COSBOA suggests easing into the system, starting with monthly payments in 2026 before moving to full payday payments later. They also want penalties to apply only when employers make mistakes, not when technical issues cause delays.
Small businesses should review payroll systems now to ensure they calculate super correctly. Budgeting for more frequent payments is key—setting up a buffer fund or line of credit could help. Businesses should also check with payroll software providers, as some may offer temporary solutions before major system updates. The Treasury is accepting feedback until April 11, so SMEs should speak up to push for a smoother transition. A phased approach, as COSBOA suggests, could give businesses the time they need to adapt.
This change is an important step for workers’ retirement savings. But if the rollout is rushed, small businesses could struggle with fines and cashflow issues. A careful transition could help both workers and businesses succeed. The clock is ticking, and finding the right balance is key.
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